CBIC Issues Various Clarificatory Circulars On GST; Prescribes Procedure For Handling ITC Mismatch In FORM GSTR-3B and FORM GSTR-2A

The Central Board of Indirect Taxes and Customs (CBIC)has recently issued a series of circulars clarifying various GST relatedissues.The CBIC, in its circular dated 27.12.2022, noted thatduringthe initial period of implementation of GST, i.e., the financial years 2017-18and 2018-19, many suppliers had failed to furnish the correct details in FORMGSTR-1, which led to certain deficiencies or discrepancies in FORM GSTR-2A.However, it observed that the concerned recipients in their FORM GSTR-3B, hadavailed input tax credit on the said supplies."The discrepanciesbetween the amount of ITC availed by the registered persons in their returns inFORM GSTR3B and the amount as available in their FORM GSTR-2A are being noticedby the tax officers during proceedings such as scrutiny/ audit/ investigationetc. due to such credit not flowing to FORM GSTR-2A of the said registered persons",the Circular said.While taking note thatvarious representations were received by the CBIC, seeking clarificationregarding the manner of dealing with such discrepancies, the CBIC in itsCircular No. 183/15/2022-GST has issued a slew of clarifications, prescribingthe procedure for handling the ITC mismatch in FORM GSTR-3B and FORM GSTR-2A.Further, the Board hasdirected that the said procedure/instruction shall apply only to the ongoingproceedings for F/Y 2017-18 and 2018-19 or in cases where, for the F/Y 2017-18and 2018-19, any adjudication or appeal proceedings are still pending. The CBICthus added that the said instructions are not applicable to the completedproceedings. In its Circular No.184/16/2022-GST, the CBIC has also issued clarifications regarding availment ofITC, in cases of supply of services by way of transportation of goods outsideIndia. In its Circular dated 27.12.2022, the CBIC has provided that if the goodsare transported to a place outside India, and the supplier and recipient of thesaid supply are located in India, then the place of supply would be theconcerned foreign destination where the goods are transported, in accordancewith the proviso to Section 12 (8) of the IGST Act. Also, the said supply ofservices would be considered as inter-State and thus, it would attract IGST.Further, the CBIC added thatin such a case, the recipient of service of transportation of goods shall beeligible to avail ITC in respect of the IGST so charged by the supplier.In cases where theappellate authority, appellate tribunal or the court concludes that the noticeissued against the tax payer under Section 74 (1) of the CGST Act is notsustainable, directing the proper officer to re-determine the amount of taxpayable, the Board, in its Circular No. 185/17/2022-GST, has clarified the timelimit within which the proper officer is required to re-determine the amount oftax.As per the said Circular,the proper officer is required to issue the order of re-determination of tax,interest and penalty within the time limit specified under Section 75(3) of theCGST Act, i.e., within a period of 2 years from the direction/ order issued byappellate authority, appellate tribunal or the court.Regarding the issue on taxability of 'No Claim Bonus' offered by theInsurance Companies, the CBIC in its Circular No.186/18/2022-GST has held that 'NoClaim Bonus' cannot be considered as a consideration for any supply provided bythe insured to the Insurance Company.The CBIC took note thatthe Insurance Companies deduct 'No Claim Bonus' from the gross insurancepremium amount, when no claim is made by the insured during the previousinsurance period.The Board reckoned thatin lieu of the 'No Claim Bonus', the insured is not under any contractualobligation to not raise an insurance claim during the period covered under thepolicy."It is, therefore,clarified that there is no supply provided by the insured to the insurancecompany in form of agreeing to the obligation to refrain from the act oflodging insurance claim during the previous year(s) and No Claim Bonus cannotbe considered as a consideration for any supply provided by the insured to theinsurance company", the Circular said.Further, the CBIC added that'No Claim Bonus' is a permissible deduction under Section 15 (3) (a) of theCGST Act, for the purpose of calculating the value of supply of the insuranceservices provided to the insured. "Accordingly, where the deduction onaccount of No claim bonus is provided in the invoice issued by the insurer tothe insured, GST shall be leviable on actual insurance premium amount, payableby the policy holders to the insurer, after deduction of No Claim Bonus mentionedon the invoice", the CBIC said.In its Circular No.187/19/2022-GST, the Board has issued clarifications regarding treatment ofstatutory dues under GST law, with respect to taxpayers for whom proceedings underthe Insolvency and Bankruptcy Code, 2016 (IBC) have been finalised.The CBIC noted that proceedingsconducted under IBC also adjudicate the government dues pending against thecorporate debtor under the CGST Act and thus, they are...

CBIC Issues Various Clarificatory Circulars On GST; Prescribes Procedure For Handling ITC Mismatch In FORM GSTR-3B and FORM GSTR-2A

Parina Katyal

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