Introduction
Government has issued 2 notifications on 21.12.2021, namely Notification 38/2021-Central Tax dated 21.12.2021 and Notification 39/2021-Central Tax dated 21.12.2021 appointing 01.01.2022 as the dated on which certain rules of the Central Goods and Services Tax (Eighth Amendment) Rules, 2021 and certain sections of Finance Act, 2021 would come into force.
Please find below a quick snapshot below for easier consumption.
Notification 39/2021 dated 21.12.2021
| Sections# | Particulars |
| 108 | “(aa) the activities or transactions, by a person, other than an individual, to its members or constituents or vice-versa, for cash, deferred payment or other valuable consideration. …” to be added to supply in section 7 from 01.01.2022 w.e.f. 01.07.2017 |
| 109 | “(aa) the details of the invoice or debit note referred to in clause (a) has been furnished by the supplier in the statement of outward supplies and such details have been communicated to the recipient of such invoice or debit note in the manner specified under section 37;”. Additional restriction on availment of ITC (100% availability of invoices in GSTR-2B) |
| 113 | Where Notice issued under section 73 and 74 is concluded – Determination of tax not paid or short paid or erroneously refunded or input tax credit wrongly availed or utilised by reason of (fraud or any willful- misstatement or suppression of facts or otherwise), Proceedings against all persons liable to penalty under the followings sections will no longer deemded to be concluded: S. 129 – Detention, seizure and release of goods and conveyances in transit S. 130 Confiscation of goods or conveyances and levy of penalty |
| 122 | “Supply of goods by any unincorporated association or body of persons to a member thereof for cash, deferred payment or other valuable consideration” which was deemed to be goods as per Entry 7 of Sch II is omitted from 01.01.2022 w.e.f. 01.07.2017 |
#Finance Act 2021
Notification 38/2021 dated 21.12.2021
| Rules* | Particulars |
|---|---|
| 2(2) | 10B. Aadhaar authentication for registered person – Aadhar authetication mandated for applying for: 1) Revocation of Cancellation of Registration – FORM REG-21 2) For filing of refund application in FORM RFD-01 under rule 89 3) For refund under rule 96 of the integrated tax paid on goods exported out of India |
| 2(3) | “In rule 23 of the said rules, in sub-rule (1), with effect from the date as may be notified, after the words “on his own motion, may”, the words, figures and letter “, subject to the provisions of rule 10B,” shall be inserted” This is done to make it in line with the amendment above (in 2(2)) |
| 2(6)(i) | “In rule 89 of the said rules, – (i) in sub-rule (1), with effect from the date as may b e notified, after the words “may file”, the words “, subject to the provisions of rule 10B,” shall be inserted” This is done to make it in line with the amendment above (in 2(2)) |
| 2(7) | ” In rule 96 of the said rules, in sub -rule (1), after clause (b), with effect from the date as may be notified, the following clause shall be inserted, namely:- “(c) the applicant has undergone Aadhaar authentication in the manner provided in rule 10B;” This is done to make it in line with the amendment above (in 2(2)) |
*Notification No. 35/2021 – Central Tax – Central Goods and Services Tax (Eighth Amendment) Rules, 2021
We have provided below a brief write up of the changes and their impact of the above mentioned notifications.
Impact of Notification 38/2021-Central Tax dated 21.12.2021
Notification 38/2021 (supra) notifies provisions of sub-rule (2), sub-rule (3), clause (i) of sub-rule (6) and sub-rule (7) of rule 2 of the Central Goods and Services Tax (Eighth Amendment) Rules, 2021 [No. 35/2021–Central Tax – 24.09.2021] with effect from 01.01.2022.
Aadhar Authentication has already been mandated for persons who are opting for new registration under GST vide Section 25 read with relevant rules. The requirement to undergo authentication of Aadhar No. is now extended to those who has been issued a certificate of registration under GST.
Rule 2(2)x
Rule 2(2) of the Central Goods and Services Tax (Eighth Amendment) Rules, 2021 seeks to insert Rule 10(B) Aadhaar authentication for registered person to CGST Rules, 2017.
Who should be authenticating their Aadhar
The Aadhar Authentication needs to be undertaken by authorised signatory of the registered persons and shall be the as follows for the following entities:
| Sl. No. | Person | Entity |
|---|---|---|
| 1 | Proprietor | Proprietorship firm |
| 2 | Any partner | Partnership firm |
| 3 | Karta | Hindu undivided family |
| 4 | Managing Director or any whole time Director | Company |
| 5 | Any of the Members of the Managing Committee | Association of persons or Body of individuals or a Society |
| 6 | Trustee in the Board of Trustees | Trust |
If Aadhaar number has not been assigned to the person required to undergo authentication of the Aadhaar number, such person shall furnish the following identification documents, namely:
- her/his Aadhaar Enrolment ID slip; and
- Any of the following:
- Bank passbook with photograph; or
- Voter identity card issued by the Election Commission of India; or
- Passport ;or
- Driving license issued by the Licensing Authority under the Motor Vehicles Act, 1988 (59 of 1988).
Also, the above person needs to mandatorily undergo the authentication of Aadhaar number within a period of thirty days of the allotment of the Aadhaar number.
Need for Aadhar Authentication
Aadhar Authentication is mandated for the following:
- For filing of application Revocation of Cancellation of Registration – FORM REG-21 under Rule 23
- 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
2(3)
Necessary amendment is being bought to Rule 23 – Revocation of cancellation of registration, to make is so that only those registered person who has undergone Aadhar authentication is entitled to file application Revocation of Cancellation of Registration – FORM REG-21.
2(6)(i)
Necessary amendment is being bought to Rule 89 – Application for refund of tax, interest, penalty, fees or any other amount., to make is so that only those registered person who has undergone Aadhar authentication is entitled to file refund application in FORM RFD-01 under rule 89.
2(7)
Necessary amendment is being bought to Rule 89 – Application for refund of tax, interest, penalty, fees or any other amount., to make is so that only those registered person who has undergone Aadhar authentication is entitled to file refund application in FORM RFD-01 under rule 89.
Novello Comments
Every registered person who is yet to complete the Aadhar Authentication for the pre-existing GST Registration is advised to complete the same at the earliest (preferably by 31.12.2021) to avoid any inconveniences
Impact of Notification 39/2021-Central Tax dated 21.12.2021
Notification 38/2021 (supra) notifies appoints 01.01.2022 as the date from which provisions of sections 108, 109 and 113 to 122 of the said Finance Act, 2021 shall come into force.
Section 108 – Amendment to S. 7(1) of CGST Act
The section 108 seeks to insert a clause in ‘scope of supply’. The relevant extract is below:
“(aa) the activities or transactions, by a person, other than an individual, to its members or constituents or vice-versa, for cash, deferred payment or other valuable consideration.
Explanation.––For the purposes of this clause, it is hereby clarified that, notwithstanding anything contained in any other law for the time being in force or any judgment, decree or order of any Court, tribunal or authority, 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;”
The inclusion of the above clause from 01.01.2022 would be deemed to have been inserted from 01.07.2017.
Section 122 – Omission of Entry 7 Sch. II of CGST Act
Presently Entry 7 of ‘Schedule II – ACTIVITIES OR TRANSACTIONS TO BE TREATED AS SUPPLY OF GOODS OR SUPPLY OF SERVICES’ of CGST Act, 2017 reads as below:
“7. Supply of Goods
The following shall be treated as supply of goods, namely:—
Supply of goods by any unincorporated association or body of persons to a member thereof for cash, deferred payment or other valuable consideration.”
The omission of the above clause from 01.01.2022 would be deemed to have been omitted from 01.07.2017.
Section 109 – Insertion of clause in S.16(2) – ITC Availment
The section 109 seeks to insert a clause adding an additional condition to the restrictions on availment of ITC set out in section 16(2) of CGST Act, 2017. The relevant extract is below:
“(aa) the details of the invoice or debit note referred to in clause (a) has been furnished by the supplier in the statement of outward supplies and such details have been communicated to the recipient of such invoice or debit note in the manner specified under section 37”
The inclusion of the above clause from 01.01.2022 would be deemed to have been inserted from 01.07.2017.
The amended section 16(2) would read as below:
“(2) Notwithstanding anything contained in this section, no registered person shall be entitled to the credit of any input tax in respect of any supply of goods or services or both to him unless,––
(a) he is in possession of a tax invoice or debit note issued by a supplier registered under this Act, or such other tax paying documents as may be prescribed.
“(aa) the details of the invoice or debit note referred to in clause (a) has been furnished by the supplier in the statement of outward supplies and such details have been communicated to the recipient of such invoice or debit note in the manner specified under section 37”
(b) he has received the goods or services or both.
(c) subject to the provisions of section 41, the tax charged in respect of such supply has been actually paid to the Government, either in cash or through utilisation of input tax credit admissible in respect of the said supply; and
(d) he has furnished the return under section 39”
Note: [The new clause is underlined]
This essentially means that the registered person shall claim the ITC only if such details have been furnished by the supplier in his Form GSTR 1 and the same has been communicated to the registered person vide Form GSTR 2A/2B. Therefore, this restricts the condition for availment of such input tax credit to the extent of such credit being communicated to the registered person.
This imposes a critical question on the enforceability of Rule 36(4) of the CGST Rules, 2017. Since clause is being added to the relevant section, thereby effectively constraining the availment of such credit, the same shall take precedence over the Rule.
1.1 Section 113 – Insertion of clause in S.16(2) – Changes to Penalties deemed to be concluded
The section 113 seeks to substitutes a part of clause (ii) in the Explanation to section 74 of CGST Act, 2017.
The relevant extract of explanation prior to the substitution is as below:
“Explanation 1.—For the purposes of section 73 and this section,—
…
(ii) 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.”
The relevant extract of explanation post substitution is as below:
“Explanation 1.—For the purposes of section 73 and this section,—
…
(ii) 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.”
The sections which are removed from the explanation vide the substitution are as following:
- Section 129 – Detention, seizure and release of goods and conveyances in transit
- Section 130 – Confiscation of goods or conveyances and levy of penalty
The above indicates the intention of law to no longer treat the proceedings against all the persons liable to pay penalty under section 129 and 130 to be deemed to be concluded even when proceedings under section 73 and 74 is concluded.
Note 1: Section 73 – Determination of tax not paid or short paid or erroneously refunded or input tax credit wrongly availed or utilised for any reason other than fraud or any willful-misstatement or suppression of facts.—
Note 2: Section 74 – Determination of tax not paid or short paid or erroneously refunded or input tax credit wrongly availed or utilised by reason of fraud or any willful-misstatement or suppression of facts
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