Registration, Refund, Payment & Returns

1. Registration, Refund, Payment & Returns CA S.S. Rangnekar

2. Introduction • GST is the biggest reform in indirect taxation system the country has ever seen. • Preparations at all levels for legislative, infrastructural, systemic changes are being made. • GST council is the most important body under the new legislation. • Discussion here in under based on the GST model law.

3. Advantages of Registration • Business is legally recognized as supplier of goods and services. • Proper accounting of taxes paid on input goods and services to be utilized for payment of GST due on supply of goods or services or both. • Pass on the credit of taxes paid on the goods or services supplied to customers or recipients. • Registered person under GST can collect GST from his customers and claim ITC.

4. New Registration • Section 19 deals with registration. • Liability for new registration is attracted only when aggregate TO during the financial year exceeds Rs. 19,00,000/- • Aggregate TO defined under section 2(6). • Aggregate turnover means the aggregate value of all taxable and non-taxable supplies, exempt supplies and exports of goods and/or services of a person having the same PAN, to be computed on all India basis and excludes taxes, if any, charged under the CGST Act, SGST Act and the IGST Act, as the case may be. • It includes exempted supplies, exports, non-taxable supplies. • It does not include value of supplies on which reverse charge mechanism is applied and inward supplies.

5. TO limit for registration • GST council has prescribed Rs19 lakhs as the TO limit for attracting liability to pay tax. • Difference in liability for registration and liability to pay tax. Supplier to obtain registration when he exceeds TO of Rs. 19 lakhs. • Lower limits for North Eastern states namely, Rs. 10 lakhs and Rs. 9 lakhs. • Persons already registered need not obtain new registration. GSTIN will be automatically granted subject to conditions. • Examples-person having POB in NE states and other states as well. Which TO limit to follow. • Person making interstate supplies-whether should obtain RC in both the states. • Person making supplies of only tax-free goods and/or services

6. Multiple registrations in one state • Person having multiple business verticals may apply for separate registrations in form GST REG 01 for each one of them. • What is business vertical? As per the definition under Model GST Law, “Business Vertical” shall have the meaning assigned to a ‘business segment’ in Accounting Standard 17 issued by the Institute of Chartered Accountants of India;Business Segment is defined under AS 17, Segment Reporting as follows:“A business segment is a distinguishable component of an enterprise that is engaged in providing an individual product or service or a group of related products or services and that is subject to risks and returns that are different from those of other business segments. Factors that should be considered in determining whether products or services are related include: (a) the nature of the products or services; (b) the nature of the production processes; (c) the type or class of customers for the products or services; (d) the methods used to distribute the products or provide the services; and (e) if applicable, the nature of the regulatory environment, for example, banking, insurance, or public utilities.” • No ITC admissible across such business verticals unless actually goods or services supplied. • For recovery of dues, all business verticals to be considered as single entity.

7. Voluntary Registration • Person not required to obtain registration based on TO limit also can apply voluntarily for registration. • Registration may get cancelled if the business is not commenced within 6 months. • Person can enter credit chain by obtaining voluntary registration.

8. Procedure for Registration • Application to be made within 30 days. • GST common portal will be set up by GSTN with backend integration with respective IT systems of Centre and State. • Procedure - Application in form GST REG-01 on GST portal to be submitted with all fields duly filled up. Part A thereof consists of PAN, email address and mobile no. which shall be first verified in the prescribed manner with the respective database and then application reference no. shall be generated. • Part B of the form to be submitted duly filled up using the said ref. no. and duly signed along with necessary documents. • Acknowledgement shall be generated in form GST REG-02. • Casual/nonresident taxable person shall be allotted a temporary ID no. for payment of advance amount of tax. • Proper officer shall examine the application along with accompanying documents and has to approve the same within 3 working days only if it is found in order. In any other case, he shall intimate the deficiencies to the applicant in form GST REG-3 within 3 working days. • Applicant may submit the clarification, information, additional documents etc. in form GST REG -04 within 7 working days. Contd….

9. Procedure for Registration (contd..) • Additional information, clarification etc. submitted to state officer shall be forwarded to the central officer and vice versa. • If the officer is not satisfied about the information, the application shall be rejected in form GST REG-5. • Failure to take action on the part of the officer within prescribed time, the RC is deemed to be granted. • Certificate of registration shall be granted in form GST REG-06. • Date of effect is date of becoming liable to registration if application filed within 30 days. • In any other case, the date of approval and grant of RC.

10. How to fill up the form GST REG-01 • Total 23 fields. • Specific caution points. • Field no. 10- Reasons to obtain registration-15 reasons • Crossing of threshold, interstate supply, recipient of services, transfer of business, death of proprietor, de-merger, change in constitution, merger/amalgamation, aggregator, E-commerce operator, taxpayer selling thru e-commerce portal, voluntary, ISD, Agents, others. • Field no. 14- Description of goods and HSN code. • Field no. 15- Description of services and Service Accounting Code.

11. Documents to be uploaded • Photograph • Proprietary concern – Proprietor • Partnership Firm /LLP – Managing/ Authorized Partners - Personal details of all partners to be submitted but photos of only 10 partners including Managing Partner to be submitted • HUF – Karta • Company – MD/ Authorized Person • Trust – Managing Trustee • AOP/ BOI – Members of Managing Committee – Personal details of all members is to be submitted but photos of only 10 members including Chairman to be submitted • Local Body – CEO or his equivalent • Statutory Body - CEO or his equivalent • Others – Person In charge Contd….

12. Documents to be uploaded • Constitution of business - GSTN will pick up as per PAN • Partnership deed for a firm, RC for other entities like society, trust etc. needs to be uploaded. • POB-Principal as well as additional POB - own premises- ownership documents such as property tax paid receipt, Municipal Khata copy, electricity bill etc. • Rented premises- agreement, ownership document of the lessor as above. • Premises obtained from others - consent letter and ownership documents as above by the consenter. • Discrepancies in documents will flag the case as “risk case” warranting post registration visit for verification. Penalty also may be provided. Contd….

13. Documents to be uploaded • Details of Bank account - opening page copy of the Bank passbook in the name of the proprietor/business concern containing A/c No., name of the account holder, MICR, IFS code and branch details. • Required for all bank accounts where business is conducted by the entity. • Details of authorized signatory-Letter of authority, Resolution copy by Board or managing committee.

14. Verification of RC Application • Dual control of CGST and SGST officers • Proper officers under both laws to verify the application. • Officer to grant RC within 3 working days if application found in order. • If application found deficient, officer has to inform applicant in form GST REG 03 within 3 working days and applicant to comply with them within 7 working days from the receipt of the said notice. • Officer examining the application first under respective State GST law may forward the reply of the applicant to CGST officer and vice-versa. • Proper officer to grant RC in form GST REG 06 if compliance by the applicant is found satisfactory • RC to be displayed on PPOB and APOB. • Physical verification may be done at the discretion of the officer. Verification report shall be uploaded in form GST REG 26 incl. photographs, on the following day.

15. Unique Identity Number • UNO agencies, Multinational Financial Organizations, Consulate or Embassy of foreign countries, any other notified person shall obtain UIN for claiming refund of taxes paid on supplies. • Application to be made in form GST REG 09 and RC to be issued in form GST REG 06 within 3 working days.

16. Registration to casual and non-resident persons • Application in form no. GST REG 10 to be made at least 5 days prior to commencement of business. • Extension may be granted for further 90 days. • Examples- works contractors, exhibition holders, etc. • Temporary ID no. will be granted to above persons for making advance payment of tax in terms of section 19A. • Such person has to make an advance deposit equivalent to estimated tax liability for the said period. • Amount deposited is credited to the electronic cash ledger and is utilized for discharge of output liability. • Remaining procedure of approval same as in case of other dealers.

17. Registration of TDS deductor andE-commerce operator • Special persons like Central/State Govt. departments, local authority, Govt. agencies or other notified persons required to deduct tax at 1% from the payments made to suppliers u/s 37(1) have to obtain RC. • Similarly, E-commerce operators while making payments to suppliers of goods/services have to deduct tax u/s 43C are required to obtain RC • Application in form GST REG 06. • Officer may cancel the RC if deduction is no more reqd. to be done. Cancellation order in form GST REG 08. Dealer to be heard.

18. Amendment in Registration Certificate • Any changes or amendments in the information furnished at the time of registration or later are required to be intimated within 15 days in form GST REG 11. • Proper officer may approve or reject such amendment/s. • Changes relating to name of the business, POB, details of proprietor, partner, director, members of MC, board of trustees etc. are reqd. to be approved and incorporated in RC. Order to be issued in form GST REG 12 within 15 working days. Effect of amendment from the date of the event causing it. • Other changes also to be informed in form GST REG 11 and shall stand amended. No approval needed. • Proper officer may reject the amendment if found deficient after issuing notice in form GST- REG-03 within 15 working days. Person to be heard before rejection. Dealer to reply in form GST REG-04 and RC to be amended within 7 days. • Rejection/approval under CGST/SGST Act is deemed rejection/approval under SGST/CGST Act. • RC shall stand amended upon failure of the officer to respond within 15 or 7 working days, as the case may be.

19. Suo moto Registration • During survey, inspection, search, enquiry or any other proceeding under the Act, it is found that person has liable for registration has failed to apply, the proper officer may register him on temporary basis by issue of an order in form GST REG 13. • Date of effect from date of order of registration. • Such person to apply for RC within 30 days from the date of grant of above RC unless appeal is filed against temporary RC order. • All other provisions of grant of RC same.

20. Migration of the registered persons from earlier law • All registered persons under existing law(Excise, Service Tax, VAT) and having a PAN shall be granted provisional GSTIN valid for 6 months or any extended period in form GST REG 21. • Every person with such provisional RC shall apply in form GST REG 20 giving the additional information and documents. • Such application to be submitted within the period prescribed in section 142 (6 months) or the extended period, as the case may be. • If the application is approved, RC in form GST REG 06 shall be issued electronically. • If the application is not found correct or complete, the proper officer may reject the application by order in form GST REG 22. • If person who is granted provisional RC is not liable to be so registered may apply in form GST REG 24 and get such RC cancelled.

21. Cancellation of Registration • Cancellation of RC either on own motion of the officer or upon application in form GST REG 14 in the following events- • Discontinuation or transfer of business due to death of the proprietor, amalgamation, demerger or disposal. • Change in the constitution. • TO falling below threshold limit. • Form GST REG 14 shall give details of closing stock and liability thereon. • Person who is voluntarily registered cannot apply for cancellation before expiry of one year. • Person seeking cancellation has to file a final return.

22. Suo moto Cancellation of RC by officer • Proper officer may cancel the RC even from an anterior date in the following events by issuing notice in form GST REG-15 • RC holder has contravened the prescribed provisions of the Act or Rules • Composition dealer has not filed returns for 3 consecutive periods • Any other person has not filed returns for continuous period of 6 months. • Person with voluntary RC has not commenced business within 6 months. • RC has been obtained by fraud, willful misstatement or suppression of facts. • Order of cancellation is in form GST REG 16. Person to be heard before cancellation and liability for periods prior to cancellation is not affected. • Cancellation under CGST is deemed cancellation under SGST and vice-versa.

23. Effect of cancellation • Reversal of ITC on the stock of inputs, inputs contained in the semi-finished and finished goods held on the immediately preceding date or payment of output tax on such goods , whichever is higher. • In case of capital goods in stock, person shall pay an amount equal to ITC on them reduced by certain percentage points as may be prescribed or the tax on the transaction value, whichever is higher.

24. Revocationof cancellation • RC cancelled by officer on his own motion may be restored upon application in form GST REG-17 by the person within 30 days from the date of receipt of cancellation order. • Revocation to be done on appreciation of the facts, within 30 days. • Rejection of revocation on good and sufficient grounds. Dealer reqd. to file the pending returns and pay the tax, interest , penalty etc. before revocation. • Revocation under CGST Act is deemed revocation under SGCT Act and vice-versa.

25. Structure of the GST RC • Every tax payer to have a 15 digit PAN based GSTIN. • First two digits, state code allotted by Indian Census 2011. For example, 09 for UP and 27 for Maharashtra. • 3-12 places for PAN of the legal entity. • 13th digit to denote the number of registrations the entity has. • 14th place is blank for future use. • 15th digit is check digit.

29. Situations where refunds would arise • Excess payment of tax due to mistake or inadvertence • Export including deemed export of goods /services and refund of inputs/input services used in them • Finalization of provisional assessment • Refund of pre-deposit for filing an appeal and refund arising out of appellate order • Payment of tax during investigation where finally no/less liability arises upon adjudication • Refund of tax paid on purchases by Embassies or UN bodies • ITC accumulation due to output being tax exempt or nil rated. • ITC accumulation due to inverted duty structure i.e. due to tax differential between output and input. • Year end or volume based incentives provided by suppliers through credit notes. • Tax refund for international tourists.

30. Refund of Tax • Sections 38 to 41 deal with refund and interest thereon. • Refund of unutilized ITC available only in two eventualities out of the above:- -Export of goods and services -Inverted tax structure(rate of tax on inputs higher than rate of tax on output) • No refund when the export is subjected to export duty. • Refund application to be made within two years from the relevant date. • Limitation of two years not applicable when tax or interest is paid under protest.

31. Procedure for refund • No prescribed form. • Application to be accompanied by documentary evidence to prove export of goods and/or services. • Documentary evidence to show incidence of such tax and interest is not passed on to any other person. Rules may provide for CA certificate. • If amount of refund is less than Rs. 5 lakhs, no documentary evidence required but only declaration for not passing the tax/interest incidence on any other person is to be filed.

32. Action by the officer • Proper officer may accept application if found correct and grant refund. • In case of export claims made by notified persons, officer may grant 80% of the refund provisionally and balance 20% after due verification. • Refund order to be passed within 90 days from the date of receipt of refund application. • Application means complete application containing all information as may be prescribed. • Refund may be withheld until the person files pending returns and pays the taxes. • Refund may be reduced by amount of tax, interest, penalty remaining unpaid. • Unpaid amount of tax/interest/penalty etc. to be deducted from the refund amount only if it is not stayed by the appellate authority by the specified date. • Specified date means last date for filing an appeal when no appeal is filed and 30 days after the last date of filing an appeal when appeal is filed. • If officer is of an opinion that any issue relating to refund application is likely to affect revenue adversely, refund may be withheld by him after hearing the applicant. Refund if ultimately granted is eligible for interest u/s 39. • No refund if amount is less than Rs 1000/-

33. Relevant Date for export of goods • In case of GOODS exported: • If such goods are exported by sea or air, the date on which ship or aircraft leaves India. • If goods are exported by land, the date on which such goods pass the frontier. • If the goods are sent by post, the date of dispatch by the post office. • If goods are sold as deemed exports (SEZ etc.), the date on which return relating to deemed exports is filed.

34. Relevant Date for export of services • In case of export of SERVICES: • The date of receipt of payment in foreign convertible exchange, where supply of service is complete prior to that date. • Date of issue of invoice where payment is received in advance prior to the date of invoice. • If tax becomes refundable as a result of any judgement, decree etc., the date of communication of such order. • In case of inverted duty structure, the end of the financial year in which such claim arises. • In case the tax is paid provisionally, the date of adjustment in the final assessment.

35. Interest on delayed refund • If refund is not granted within 90 days from the date of receipt of the application, then interest at the rate specified in the notification by the Central or State Govt. upon recommendation of the Council shall be granted for the period of delay. • If any order is passed by appellate authority, Tribunal, Court etc. against the order of proper officer, the date of such appeal order shall be considered for computation of delay.

36. Payment • Sections 35 to 37 deal with payments under the GST law. • Payments of tax, interest, penalty, fee etc. can be made through internet banking, credit/debit cards, NEFT, RTGS etc. • All cash payments to be credited in an electronic cash ledger maintained by the system. • Date of deposit is date of credit into the authorized bank of the appropriate Govt. • Credit balance in cash ledger may be used for making any payments of tax, interest, penalty, fees or any other amount.

37. Payment thru ITC • ITC as per returns filed shall be credited to an Electronic Credit Ledger maintained by the system. • Credit balance in above ledger may be used to make payments of only tax. • Adjustment of IGST, CGST, SGST. • Balance in cash or credit ledger may be refunded in accordance with refund provisions. • All liabilities of a taxable person shall be maintained in electronic register. • Order of discharge of liability- previous returns, current returns, any other dues like assessment dues. • Every person who has paid tax on the supply of goods or services shall be deemed to have passed on the credit to the recipient unless proved otherwise. Condition to claim refund.

38. Interest on delayed payments • Interest at prescribed rate payable by person on his own for the period of delay. • Interest on undue or excess claim of ITC is payable at the prescribed rate for the period to be computed in the prescribed manner.

39. TDS provisions • TDS provisions are contained in section 37. • Notified persons such as Central/State Govt.,Local Authority, Govt. Agencies, any other persons may be mandated to deduct tax from the payments to notified persons at 1% if the contract value exceeds Rs. 10 Lakhs. • Limit of 10 lakhs without tax amount. • Payment of TDS to be made within 10 days after the end of the month in which deduction is made. • Deductor to issue certificate to the deductee in the prescribed manner within 5 days from crediting the amount into appropriate Govt. • Deductor liable to pay interest for late payments of TDS and late fee at Rs. 100 per day until issuance of certificate subject to ceiling of Rs. 5000/-. • Amount paid by deductor and reflected in his return filed u/s 27 to be credited to deductee’s electronic cash ledger. • Provisions for determination of default of TDS etc. and refund of excess or erroneous deduction.

40. Returns • Sections 25 to 34 deal with returns. • Periodicity is monthly. • First step is furnishing details of outward supplies by 10th of the succeeding month is mandatory except to input service distributors, composition dealers u/s 8, tax deductors u/s 37. To be furnished prior to filing the return. • Outward supplies cover zero rated/interstate supplies, exports, goods retuned out of inward supplies, debit/credit notes, supplementary invoices etc. • Person can rectify any errors/omissions in the above details based on the match/mismatch exercise u/s 29. • Last date to file rectified details is the last date for filing the return u/s 27 for the month of Sept. of the subsequent year. Contd.

41. Returns • Person to file similar details of inward supplies incl. services on which tax is payable on RCM, interstate inward supplies on or before 15th of subsequent month. • Person to verify the details of outward supplies details of his suppliers to check his inward supplies. Gap of 5 days provided for the purpose. • Details can be rectified/modified if any error/omission found upon match/mismatch exercise u/s29. • Last date to file rectified details is the last date for filing the return u/s 27 for the month of Sept. of the subsequent year. • ITC claimed as self assessed is credited to electronic credit ledger of the person. • Credit in such ledger cannot be utilized unless valid return is filed. Contd.

42. Returns • First return: • Outward supplies details for the period from date on which he becomes liable to registration till end of the month in which RC is granted to him. • Inward supplies details for the period from the effective date of RC till end of the month in which RC is granted. • All other provisions for returns to apply to first return as well. • Last return to be filed within 3 months from date of cancellation or such order, whichever is later, in prescribed form. Section 31

43. Returns • Every person to file monthly return in prescribed form within 20 days after the end of the month.-section 27 • Composition dealer to file quarterly return within 18 days from the end of the quarter. • Person prohibited from filing return for any tax period if a valid return for previous tax period is not filed. • Payment of tax to be made before filing the return. • Return without payment is not treated as valid return. • Person to file nil returns even if no supplies are made. • Deductors to file monthly returns within 10 days from the end of the month. • Input Service Distributor to file monthly return within 13 days from the end of the month. • Return can be rectified for any error or omission. Last date to file rectified details is the last date for filing the return u/s 27 for the month of Sept. of the subsequent year.

44. Matching of supplies • Details of inward supplies shall be matched with corresponding outward supplies for the same or any preceding tax period. • Also with additional duty of customs paid u/s 3 of the Customs Tariff Act, 1975. • For duplication of ITC claim. • Matched items of inward supplies as above subject to section 16(provisions of ITC) will be accepted and communicated to the recipient. • Discrepancy or duplication items, if any, will be communicated to the recipient. • Such discrepancy, if not rectified by the supplier in his valid return, shall be added in the output liability of the recipient. • Recipient can reduce the liability added as above if the supplier files rectified valid return within the time frame u/s 27(7). • Interest is leviable on the additions made in output liability for the intervening period. • Same mechanism to be followed for debit/credit notes.

45. Annual Return • Every person other than ISD, deductor u/s 37, casual taxable person and non-resident taxable person is required to file an annual return on or before 31st Dec following the end of the financial year. • Annual return to be accompanied by audited copy of annual accounts as required u/s 42(4) and reconciliation statement. • Late fee of Rs. 100/- per day of delay subject to limit of 0.25% of the aggregate TO. • Similar late fee for delay in filing outward/inward supplies details, valid returns, at Rs. 100/- per day subject to max. of Rs. 5000/-.

46. Thank You