GST: Taxing times bl-premium-article-image

Mohan R. Lavi Updated - April 30, 2018 at 09:43 PM.

Circular 42 has created more doubts

Having absorbed the erstwhile Central Excise, Service Tax and VAT laws into its fold, the GST laws had to provide for spillovers in terms of taxes and litigation under these laws. Section 142 of the CGST Act thought up four areas where there could be spillovers — recovery of arrears of wrongly availed Cenvat Credit, recovery of Cenvat credit carried forward wrongly, recovery of arrears of central excise duty and service tax, and recovery of arrears due to revision of return under the existing law. As a matter of procedure, the provisions provided powers to initiate a solution either under the erstwhile law or under the GST Act. The provision on appeals goes, “In case where any proceeding of appeal, review or reference relating to a claim for Cenvat credit had been initiated, whether before, on or after the appointed day, under the existing law, any amount of such credit becomes recoverable, the same shall, unless recovered under the existing law, be recovered as an arrear of tax under the CGST Act”.

Circular No 42

On how these procedures would play out in the GST regime, the Central Board of Indirect Taxes and Customs (CBIC) came out with Circular No 42/16/2018-GST dated April 13, 2018 to “ensure uniformity in the implementation of the provisions of the law across the field formations”.

One would have thought such a Circular would give details on how such issues would be solved under the erstwhile laws, which would be transitioned to the GST era. The Circular disappoints by stating that for claims for Cenvat Credit, and recovery of arrears shall, unless recovered under the existing law, be recovered as central tax liability to be paid through the utilisation of amounts available in the electronic credit ledger or electronic cash ledger of the registered person, and the same shall be recorded in Part II of the Electronic Liability Register. It is time CBIC recognises Central Excise, Service Tax and VAT as erstwhile laws and not existing laws.

Even after this Circular, the taxpayer is not clear whether these issues would be sorted out under the erstwhile laws or the GST laws. Taxpayers across the country have experienced that the assessing officers in the GST era are not necessarily their erstwhile friendly officers in the neighbourhood. In the absence of clarity on how issues in the erstwhile taxes would be settled in the GST era, it is possible for a taxpayer to receive notices under both the taxation regimes. The Circular goes on to clarify that in case returns have to be filed for the previous period, the go-to portal would be the Aces portal but the mode of payment of tax in the GST regime would change to “Icegate “from “Easiest”. Recovery of arrears from assessees under the erstwhile laws in cases where such assessees are not registered under the CGST Act, 2017 would be in cash.

The Circular discussed has been issued under Section 168(1) of the CGST Act which empowers the Board to issue such orders, instructions or directions to the central tax officers as it may deem fit, if it considers it necessary or expedient to do so for the purpose of uniformity in the implementation. All officers and persons employed in the implementation of this Act shall observe and follow such orders, instructions or directions. Interestingly, the Section does not use the word Circular though Circulars are fast becoming the most popular way for the CBIC to communicate with GST officers. With the meetings of the GST Council reducing, changes in GST laws are on pause mode for now. The only major changes could be the announcements regarding the filing of returns and matching of invoices — Circulars can take care of the rest.

The writer is a chartered accountant

Published on April 30, 2018 14:59