CBIC has issued Notification No.18/2022 - CT dated 28.09.2022 to appoint the 1st day of October, 2022, as the date on which the provisions of sections 100 to 114, except clause (c) of section 110 and section 111, of the said Act shall come into force and Notification No.19/2022 - CT dated 28.09.2022 to notify Central Goods and Services Tax (Second Amendment) Rules, 2022.

Earlier, The CBIC has issued Notification No. 17/2022 - Central Tax dated August 01, 2022 to amend Notification No. 13/2020 - Central Tax, dated March 21, 2020 to decrease the e-Invoicing limit from 20 crore to 10 crore w.e.f. October 01, 2022.

Accordingly, Indian businesses with an annual aggregate turnover of more than Rs.10 crore up to Rs.20 crore, as calculated in any preceding financial year from 2017-18 up to 2021-22, must begin generating e-invoices from 1st October 2022. 

Further, GST Portal will be open on 01.10.2022 till 30.11.2022 for all registered Tax payers to file / revise Form Tran 1/ Tran 2. The advisory for filing Transition Form 1 and 2 (TRAN 1/2) will be released on the GST Portal on 1st Oct 2022.

Below is the summary of some other important amendments applicable from 01.10.2022.
1. Restrictions imposed for availing ITC

A new clause (ba) has been inserted in subsection (2) of Section 16, so as to provide that input tax credit with respect to a supply may be availed only when such credit has not been restricted in the details communicated to the registered person under section 38.

This is a new condition which is to be satisfied for availment of input tax credit. Now, input tax credit with respect to a supply may be availed only when such credit has not been restricted in the details communicated to the registered person under section 38.

Section 38 has been substituted to provide that - The auto-generated statement under sub- section (1) shall consist of

(a) details of inward supplies in respect of which credit of input tax may be available to the recipient;

(b) details of supplies in respect of which such credit cannot be availed, whether wholly or partly, by the recipient, on account of the details of the said supplies being furnished under sub-section of section 37,

(i) by any registered person within such period of therefore any non-compliance at the end of supplier will cause denial of ITC to the recipient. Section of Finance Act, 2022 Section/Subsection of CGST Act Nature of Change Provision Comments taking registration as may be prescribed; or

(ii) by any registered person, who has defaulted in payment of tax and where such default has continued for such period as may be prescribed; or

(iii) by any registered person, the output tax payable by whom in accordance with the statement of outward supplies furnished by him under the said subsection during such period, as may be prescribed, exceeds the output tax paid by him during the said period by such limit as may be prescribed; or

(iv) by any registered person who, during such period as may be prescribed, has availed credit of input tax of an amount that exceeds the credit that can be availed by him in accordance with clause (a), by such limit as may be prescribed; or

(v) by any registered person, who has defaulted in discharging his tax liability in accordance with the provisions of sub-section (12) of section 49 subject to such conditions and restrictions as may be prescribed; or

(vi) by such other class of persons as may be prescribed."

Now, the auto generated statement will become the document to be relied upon by the tax officers for allowing or disallowing the ITC. Such restrictions are draconian and arbitrary as these provisions will cause more hardship to the taxpayers. Further, the total credit of recipient is now being subjected to the act of the supplier and therefore any non-compliance at the end of supplier will cause denial of ITC to the recipient.

 2. Extension of time limit for availing ITC.

Section 16(4) has been amended to provide that a registered person shall not be entitled to take input tax credit in respect of any invoice or debit note after the thirtieth day of November following the end of the financial year to which such invoice or debit note pertains, or furnishing of the relevant annual return, whichever is earlier. Earlier, the due date of availment of Input tax credit for any financial year was provided as the due date of furnishing of the return under section 39 for the month of September i.e. 20th October in case of monthly return filers and 22nd / 24th October in case of quarterly return filers. The due date of availing ITC is now proposed to be extended upto 30th November following the end of financial year.

This means that in case of forward charge, ITC can only be availed if it appears in GSTR-2B upto the month of October and not afterwards.

 3. Provisions for cancellation of Registration by officer

For Composite Dealer

Section 29(2)(b) has been amended to provide for cancellation of registration of a person paying tax under section 10 has not furnished the return for a financial year beyond three months from the due date of furnishing the said return;

Currently, the registration can be cancelled for a composition taxpayer if they do not furnish their return for three consecutive tax periods. As they are liable to file return on annual basis. So three consecutive tax periods would mean 3 years which was not the intention of legislatures.

This amendment clarifies that if the person registered under composition fails to furnish the designated return i.e. GSTR-4 beyond 3 months from the due date, the proper officer may proceed suo-motu for cancellation of registration after affording an opportunity of being heard.

For other than composite dealer

Currently, the registration can be cancelled for a normal taxpayer if they do not furnish their return for six consecutive months.

Now, section 29(2)(c) has been amended to provide for prescribing continuous tax periods for which return has not been furnished, which would make a registration liable for cancellation, in respect of any registered person, other than a person specified in clause (b) thereof.

 4. Extension of time limit for issuing credit note.

Section 34(2) has been amended to provide for thirtieth day of November following the end of the financial year, or the date of furnishing of the relevant annual return, whichever is earlier, as the last date for issuance of credit notes in respect of any supply made in a financial year.

Currently, the due date for issuance of credit note is September following the end of the financial year to which the supply relates.

The said due date for credit note is extended to 30th November following the year in which the supply was made.

5. Amendment in the procedure for filing return of outward supply.

(i) Section 37(1) has been amended to omit first proviso to sub-section (1) so as to do away with two way communication process in return filing.

In absence of the originally perceived return filling system, these provisions are redundant. The government omitted this proviso to bring the law and the compliance in line with each other.

(ii) Section 37(2) has been omitted so as to do away with two-way communication process in return filing.

In absence of the originally perceived return filling system, these provisions are redundant. The government omitted this proviso to bring the law and the compliance in line with each other.

(iii) Section 37(3) has been amended to remove reference to unmatched details under section 42 or section 43, as the said sections are proposed to be omitted,

Proviso to Section 37(3) has been amended to provide for thirtieth day of November following the end of the financial year or furnishing of the relevant annual return, whichever is earlier, as the last date for rectification of errors or omission in respect of details of outward supplies furnished under sub-section (1).

(iv) Section 37(4) has been inserted to provide for tax period-wise sequential filing of details of outward supplies under sub-section (1).

It is provided in the Act that one cannot furnish a return for the succeeding tax period (say August) if the return for any of the previous tax period is not filed (say July or earlier).

the Government may, on the recommendations of the Council, by notification, subject to such conditions and restrictions as may be specified therein, allow a registered person or a class of registered persons to furnish the details of outward supplies under sub-section (1), even if he has not furnished the details of outward supplies for one or more previous tax periods."

 6. Amendment in provisions for furnishing of Return u/s 39.

(i) Section 39(5) has been amended to provide that the non-resident taxable person shall furnish the return for a month within thirteen days after the end of the month or within seven days after the last day of the period of registration specified under sub-section (1) of section 27, whichever is earlier.

The due date of filing GSTR-5 for registered non-resident taxable person would now be 13th rather than 20th of the next month.

(ii) Section 39(7) has been amended to provide an option to the persons furnishing return under proviso to sub-section (1) to pay either the self- assessed tax or an amount that may be prescribed.

The amendment has been made for taxpayers paying under QRMP scheme.

Now, the proposed amendment says that the registered person covered under proviso to section 39(1) shall pay-

(a) an amount equal to the tax due taking into account inward and outward supplies of goods or services or both, input tax credit availed, tax payable and such other particulars during a month; or

(b) in lieu of the amount referred to in clause (a), an amount determined in such manner and subject to such conditions and restrictions as may be prescribed.. The above clause (b) is difficult to understand and may add on the confusion and is prone to further litigation.

(iii) Section 39(9) has been amended by removing reference of section 37 and section 38.
For the purpose of sub- section (9) of Section 39, there is no requirement to consider the provisions of Section 37 and 38 for any rectification to be done by the registered person.

Proviso to Section 39(9) has been amended to provide for thirtieth day of November following the end of the financial year, or the date of furnishing of the relevant annual return, whichever is earlier, as the last date for the rectification of errors in the return furnished under section 39.
Currently, the last date for rectification of any error or omission for any financial year has been provided as the due date of filing September return of the next financial year i.e. 20th October in case of monthly return filers and 22nd / 24th October in case of quarterly return filers.

This date is now being modified to 30th November. In effect, the last return within which the rectification will be allowed be October GSTR-3B to be filed within 30th November (assuming the returns are filed within the due date).

(iv) Section 39(10) has been amended to provide for furnishing of details of outward supplies of a tax period under sub-section (1) of section 37 as a condition for furnishing the return under section 39 for the said tax period.

In the GST law, it would be provided that furnishing of GSTR-3B for a particular period would not be allowed if the return for any of the previous tax periods or the details of outward supplies under sub-section (1) of section 37 for the said tax period has not been furnished by him.

By notification, the Government may allow allow a registered person or a class of registered persons to furnish the return, even if he has not furnished the returns for one or more previous tax periods or has not furnished the details of outward supplies under subsection (1) of section 37 for the said tax period.

7. ITC reversal and interest payment by buyer in respect of supplies on which supplier defaults in making payment.

Section 41 of the Central Goods and Services Tax Act has been substituted to do away with the concept of "claim" of eligible input tax credit on a "provisional" basis and to provide for availment of self-assessed input tax credit subject to such conditions and restrictions as may be prescribed.

ITC which was earlier provisionally taken as self-assessment is now no more to be considered as a provisional credit. Availment in the electronic credit ledger would be considered as final credit itself.

If the tax has not been paid by the supplier, the recipient would be liable to reverse his input tax credit along with interest in such manner as may be prescribed.

It has been provided that when the said payment is made by the supplier on a later date, the recipient would be able to re-avail the credit in the prescribed manner.

8. Removal of two way acceptance and rejection communication process for invoices and credit notes under GST.

Section 42 of the Central Goods and Services Tax Act relating to matching, reversal and reclaiming of input tax credit has been omitted so as to do away with the concept of "claim" of eligible input tax credit on a "provisional" basis and subsequent matching, reversals and reclaim of such credit.

The GST law had prescribed for two-way communication process between the supplier and recipient through GSTR-1, 1A, 2A and 2. Such two-way communication could never be brought into force by the government. Consequently, the Government proposes to remove Section 42 .

Section 43 of the Central Goods and Services Tax Act relating to matching, reversal and reclaiming of reduction in output tax liability has been omitted so as to do away with two-way communication process in return filing.

The GST law had prescribed for two-way communication process between the supplier and recipient through GSTR-1, 1A, 2A and 2. Such two-way communication could never be brought into force by the government. Consequently, the Government proposes to remove Section 43 .

Section 43A of the Central Goods and Services Tax Act in relation to the procedure for furnishing return and availing input tax credit has been omitted.

Section 43A had not yet been notified till date. Section 43A is now proposed to be removed from the GST law.

9. Levy of late fee on GSTR-8

Section 47(1) has been amended to provide to provide for levy of late fee for delayed filing of return under section 52 and to remove reference of section 38 as there is no requirement of furnishing details of inward supplies by the registered person under the said section 38.

The provisions for late fees were provided for GSTR-2 under section 38. Now that the same has been redundant, Section 38 has been removed from the late fees provisions.

Further, the late fees have been prescribed for GSTR-8 (return for e-commerce operators required to collect TCS) also apart from GSTR-1 and 3B.

10. Payment of taxes

(i) Section 49(4) of the Central Goods and Services Tax Act has been amended to provide for prescribing restrictions for utilizing the amount available in the electronic credit ledger.

The Government has proposed to insert the words- "and restrictions" so as to provide for prescribing restrictions for utilizing the amount available in the electronic credit ledger.

This may also be the enabling provisions for providing further restrictions in the utilization of balance in the electronic credit ledger.

(ii) Section 49(12) inserted to provide for prescribing the maximum proportion of output tax liability which may be discharged through the electronic credit ledger.

Section 49(12) of the CGST Act 2017 provides that the Government may specify the maximum proportion of output tax liability which may be discharged through the electronic credit ledger for specified class of persons. The balance has to be paid through the electronic cash ledger.

Currently, Rule 86B provides for such restriction of utilization from electronic credit ledger only upto 99% of output taxes for certain taxpayers. This may also be the enabling provisions for providing further restrictions in the utilization of balance in the electronic credit ledger.

11. Extension of time limit for rectification of errors in return furnished in GSTR-8

Section 52(6) has been amended to provide for thirtieth day of November following the end of the financial year, or the date of furnishing of the relevant annual return, whichever is earlier, as the last date upto which the rectification of errors shall be allowed in the statement furnished under sub-section (4).

For E-commerce operators who are required to collect TCS and are filing GSTR-8, the last date for rectification of any error or omission for any financial year has been provided as the due date of filing September return of the next financial year. This date is now being modified to 30th November following the end of the financial year or the actual date of furnishing of the relevant annual statement, whichever is earlier.

12. Refund of Tax

(i) Section 54(1) has been amended to explicitly provide that claim of refund of any balance in the electronic cash ledger shall be made in such form and manner as may be prescribed.

It is proposed that refund of any balance in electronic cash ledger cannot be claimed in GSTR-3B. The said refund shall be claimed in such form and manner as would be prescribed. It should be noted that currently there is no mechanism to claim refund of electronic cash ledger via GSTR-3B, hence making it a redundant provision in the Act.

(i) Section 54(2) has been amended by providing time limit of two years from the last day of the quarter in which the supply was received for claiming refund of tax paid on inward supplies of goods or services or both by a specialised agency of the United Nations Organisation or any Multilateral Financial Institution and Organisation notified under the United Nations (Privileges and Immunities) Act, 1947 (46 of 1947), Consulate or Embassy of foreign countries or any other person or class of persons, as notified under section 55.

(ii) inserted a new subclause (ba) in clause (2) of Explanation to Section 54(10) in order to provide clarity regarding the relevant date for filing refund claim in respect of supplies made to a Special Economic Zone developer or a Special Economic Zone unit where a refund of tax paid is available in respect of such supplies themselves, or as the case may be, the inputs or input services used in such supplies, to be the due date for furnishing of return under section 39 in respect of such supplies;

13. Central Goods and Services Tax (Second Amendment) Rules, 2022
Cancellation of GST registration
The CBIC has inserted two more clauses to Rule 21 for the cancellation of GST registration including ?
(h) being a registered person required to file return under subsection (1) of section 39 for each month or part thereof, has not furnished returns for a continuous period of six months;
(i) being a registered person required to file return under proviso to subsection (1) of section 39 for each quarter or part thereof, has not furnished returns for a continuous period of two tax periods.
Restrictions imposed for availing ITC
Further, Rule 37 is also amended as "(1) A registered person, who has availed of input tax credit on any inward supply of goods or services or both, other than the supplies on which tax is payable on reverse charge basis, but fails to pay to the supplier thereof, the amount towards the value of such supply along with the tax payable thereon, within the time limit specified in the second proviso to sub-section (2) of section 16, shall pay an amount equal to the input tax credit availed in respect of such supply along with interest payable thereon under section 50, while furnishing the return in FORM GSTR-3B for the tax period immediately following the period of one hundred and eighty days from the date of the issue of the invoice:
Provided that the value of supplies made without consideration as specified in Schedule I of the said Act shall be deemed to have been paid for the purposes of the second proviso to sub-section (2) of section 16:
Provided further that the value of supplies on account of any amount added in accordance with the provisions of clause (b) of sub-section (2) of section 15 shall be deemed to have been paid for the purposes of the second proviso to sub-section (2) of section 16.;
(2) Where the said registered person subsequently makes the payment of the amount towards the value of such supply along with tax payable thereon to the supplier thereof, he shall be entitled to re-avail the input tax credit referred to in sub-rule (1).
Omission of Rules
CGST Rules 69, 70, 71, 72, 73, 74, 75, 76, 77 and 79 in relation to Matching, Final acceptance and Communication and rectification of discrepancy in claim of input tax credit and reversal of claim of input tax credit as well as in relation to Matching, Final acceptance and Communication and rectification of discrepancy in reduction in output tax liability and reversal of claim of reduction have been omitted.