Ease of Doing GST

Ease Of Doing GST

The sources primarily contain excerpts from the Central Goods and Services Tax (CGST) Rules, 2017, related forms, excerpts from the CGST Act, and recent GST Council recommendations, focusing on compliance, administration, returns, audit procedures, and specific mechanisms like Input Tax Credit (ITC) and E-Way Bills (EWB).

1. Statutory Provisions, Definitions, and Principles

Legal Definitions and Documents: Key definitions include "credit note" and "debit note" issued under Section 34, "deemed exports" (notified under Section 147), "manufacture" (processing resulting in a new product with distinct name, character, and use), and "Revisional Authority" (referred to in Section 108). A "document" includes written, printed, and electronic records.

Presumption as to Documents: Documents produced, seized, or received from outside India and tendered in evidence are deemed authentic; the court shall presume the truth of their contents unless the contrary is proven. Electronic records, including statements contained in computer-produced printed material or information stored electronically, are deemed documents and admissible in proceedings without further proof.

Summary Assessment and Revision: The proper officer may conduct a summary assessment (Section 64) to protect revenue interests, with prior permission from the Additional or Joint Commissioner. The order is issued in FORM GST ASMT-16. A person can apply for withdrawal of the summary assessment order in FORM GST ASMT–17. The Revisional Authority (Section 108) can call for and examine subordinate orders considered erroneous or prejudicial to revenue interests. The power to summon persons and produce documents for inquiries is available to the Authority, Director General of Anti-profiteering, or an authorized officer.

2. GST Forms and Compliance Procedures

Input Tax Credit (ITC): ITC details are filed in forms such as FORM GST ITC-01. A registered person can claim ITC even if a supporting document lacks specified particulars, provided it contains the tax amount, description, value of supply, GSTINs (supplier and recipient), and place of supply for inter-State supply. The amount of credit on capital goods is calculated by reducing the input tax by five percentage points per quarter or part thereof from the invoice date.

Job Work: Details of challans for goods dispatched to, received from, or sent between job workers during a quarter must be included in FORM GST ITC-04. This form must be furnished by the twenty-fifth day of the month succeeding the said quarter or within an extended period notified by the Commissioner. The challan issued by the principal must contain details specified in Rule 55. Waste and scrap from job work may be supplied by a registered job worker or by the principal if the job worker is unregistered.

Returns (GSTR Series): Registered persons must furnish inward supply details in FORM GSTR-2, and are generally required to file monthly/quarterly returns, make deposits to the electronic cash ledger, and file claims for refund or applications for registration amendments. FORM GSTR-3 can only be generated after FORM GSTR-1 and FORM GSTR-2 are filed. Details of outward supplies are electronically made available to recipients in Part A of FORM GSTR-2A, FORM GSTR-4A, and FORM GSTR-6A. ISD credit received is detailed in Part B of FORM GSTR 2A.

E-Way Bills: Information for generation of e-way bills (FORM GST EWB-01) must be furnished prior to movement of goods. A consolidated e-way bill (FORM GST EWB-02) may be generated for multiple consignments in one conveyance. If a vehicle is detained for over thirty minutes, the transporter may upload the information in FORM GST EWB-04. Inspection and verification reports are recorded in FORM GST EWB-03 (Part A within 24 hours, Part B within three days).

Demand and Recovery: A summary of an order issued under certain sections (including penalty under Section 125, detention under Section 129, or confiscation under Section 130) must be uploaded electronically in FORM GST DRC-07, specifying the amount payable. This order serves as the notice for recovery. Rectification of the order is done in FORM GST DRC-08. Recovery of dues under existing laws is summarized in FORM GST DRC-07A.

Appeals and Revision: The Appellate Authority/Appellate Tribunal must issue a summary of the order confirming the final demand amount in FORM GST APL-04. Procedures detail the furnishing of appeal documents, stating facts, grounds of appeal, and amounts under dispute (tax, interest, penalty, fees, market value of seized goods). Additional evidence in appeal is limited; it must be allowed only if the adjudicating authority/officer is given a reasonable opportunity to examine/cross-examine/rebut the evidence.

3. Accounting and Record Keeping

Every registered person must maintain records at their principal place of business showing production/manufacture, inward/outward supply, stock of goods, ITC availed, and tax details.

Specific Accounts: Manufacturers must maintain monthly production accounts showing quantitative details of raw materials, services used, goods manufactured, including waste and by-products. Service suppliers maintain quantitative records of goods used, input services utilized, and services supplied. Works contract executors must keep separate accounts detailing names/addresses of persons on whose behalf the contract is executed, goods/services received and utilized, payments received, and supplier details. Agents must keep particulars of goods/services received/supplied on behalf of every principal, accounts furnished to them, and tax paid.

4. GST Audit Manual (GSTAM) Procedures

The Model All India GST Audit Manual (GSTAM) details the procedures for conducting GST audits. Audit aims to verify the correctness of facts declared in returns versus books of accounts and measure compliance.

Audit Process Flow: The key steps include selection of taxpayers based on risk assessment, issuance of notice for audit (FORM GST ADT-01), pre-audit desk review (analyzing data and risk areas), preparation and approval of an audit plan, examination of records, communication of discrepancies, preparation of Draft Audit Report (DAR), and issuance of Final Audit Report (FAR) (FORM GST ADT-02).

Required Documents: The audit team may require trial balances, annual financial accounts, cost audit reports, income tax audit reports, reconciliation statements (GSTR 9, GSTR-1, GSTR-3B), supplier lists, ledger accounts, and stock registers.

Reports and Communication: The Draft Audit Report (DAR) must be concise and mention supporting circulars or legal decisions. The FAR is issued after approval, preferably electronically, within 30 working days of approval. If the tax dues remain unpaid 30 days after FAR issuance, demand and recovery proceedings (Section 73/74) may be initiated.

5. GST Council Recommendations (56th Meeting, September 2025)

The 56th GST Council meeting introduced several measures for trade facilitation:

Implementation Dates and Rates: Changes in GST rates on services and goods (except specified tobacco products) are effective from September 22, 2025. GST on Pan Masala, Gutkha, etc., will continue at existing rates, with compensation cess obligations fully discharged.

GSTAT Operationalization: The Goods and Services Tax Appellate Tribunal (GSTAT) will be operational for accepting appeals before the end of December 2025. The deadline for limiting the filing of backlog appeals to the Principal Bench is recommended as June 30, 2026.

Refund Measures: Provisional refund of 90% claimed arising out of the Inverted Duty Structure (IDS) is recommended, similar to zero-rated supplies, based on risk evaluation by the system. This provision is expected to be operationalized from November 1, 2025.

Registration and Intermediary Services: A simplified GST registration scheme for small and low-risk businesses is recommended, operational from November 1, 2025. The Council recommended omitting clause (b) of Section 13(8) of the IGST Act, defining the place of supply for "intermediary services" as the default provision under Section 13(2) (location of recipient).

Post-Sale Discounts: Recommended amendments to Section 15(3)(b) of the CGST Act to omit the requirement of having a prior agreement for discount eligibility. Clarification was issued regarding non-reversal of ITC by the recipient when post-sale discount is given via financial/commercial credit notes.

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Key Points Extracted

1. Mandatory Electronic Filing and Forms: Electronic filing is standard practice. Important forms include FORM GST ITC-01 (stock details for ITC claim/reversal), FORM GST REG-16 (cancellation application details), and FORM GST CMP-07 (order for acceptance/rejection of reply to show cause notice for withdrawal of composition option).

2. Input Tax Credit (ITC) Documentation: ITC can be claimed even if the source document lacks all specified particulars, provided it contains the amount of tax charged, description of goods/services, total value of supply, GSTINs (supplier/recipient), and place of supply for inter-State supply. The value of capital goods for ITC purposes is reduced by five percentage points per quarter or part thereof from the invoice date.

3. Job Work Reporting: Details of challans relating to goods sent to or received from a job worker must be reported quarterly in FORM GST ITC-04 by the twenty-fifth day of the month succeeding the quarter.

4. E-Way Bill System Requirements: The core forms are FORM GST EWB-01 (e-way bill), FORM GST EWB-02 (consolidated e-way bill), FORM GST EWB-03 (Verification Report), and FORM GST EWB-04 (Report of Detention > 30 minutes). The inspection summary (Part A of EWB-03) must be filed within 24 hours, and the final report (Part B) within three days.

5. Accounts Maintenance: Registered persons manufacturing goods must maintain monthly production accounts detailing quantitative inputs, goods manufactured, and waste/by-products. Works contract executors must keep separate accounts detailing receipts, utilization of goods/services, and payments received.

6. Demand, Recovery, and Appeals Summaries: Summaries of assessment or penal orders are uploaded electronically in FORM GST DRC-07, which is treated as the notice for recovery. Appellate and Revisional Authorities issue a summary of the confirmed demand in FORM GST APL-04.

7. GST Council Facilitation (Sept 2025): The GST Appellate Tribunal (GSTAT) is scheduled to begin accepting appeals by the end of December 2025. A risk-based 90% provisional refund system for IDS and zero-rated supplies is recommended, planned for operation from November 1, 2025.

8. Audit Procedures: The Audit process involves issuing FORM GST ADT-01 (notice for audit), preparation of an Audit Plan (Annexure 5 format), performing a pre-audit desk review, and concluding with the Final Audit Report (FORM GST ADT-02). The examination involves correlating returns (GSTR series) with financial statements (P&L, Balance Sheet).

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Draft Document: Overview of GST Rules, Procedures, and Compliance Mechanisms

This draft synthesizes crucial information regarding GST compliance, administrative procedures, and recent regulatory changes, drawing heavily on the Central Goods and Services Tax (CGST) Rules and related forms.

I. Registration, Returns, and Input Tax Credit (ITC)

ITC Claim and Documentation. A fundamental principle of ITC is that credit may be availed even if a document lacks all specified particulars, provided it contains essential data: the amount of tax charged, description of goods/services, total value of supply, GSTINs of the supplier and recipient, and the place of supply for inter-State supply. For capital goods, the ITC claim must account for a reduction in the input tax at the rate of five percentage points per quarter or part thereof from the date of the original invoice.

Filing Procedures and Forms. Compliance tasks, such as furnishing details of outward and inward supplies, filing returns (monthly, quarterly, annual, or final), depositing credit into the electronic cash ledger, claiming refunds, and applying for registration changes, are conducted through the common portal.

• The application for cancellation of registration requires the electronic submission of FORM GST REG-16, detailing inputs, semi-finished/finished goods stock, and capital goods held on the cancellation date, along with liability and payment details.

• Filing returns is sequential: FORM GSTR-3 can only be generated once FORM GSTR-1 and FORM GSTR-2 for the tax period have been filed.

• Registered persons opting to pay tax under the composition scheme, or withdrawing from it, must furnish required statements, potentially leading to an order of withdrawal/acceptance in FORM GST CMP-07.

Input Service Distributor (ISD). The ISD distributes the credit of Central Tax (CGST) or Integrated Tax (IGST) by issuing a document containing the amount of ITC distributed. This credit is made available to the recipient in Part B of FORM GSTR 2A after the ISD files their return in FORM GSTR-6. A registered person with the same PAN and State code as the ISD may issue an invoice or credit/debit note to transfer credit of common input services to the ISD, containing specific details including GSTINs and the date of issue.

II. E-Way Bill System and Movement of Goods

The E-Way Bill system manages the documentation and movement of goods, primarily when the consignment value exceeds fifty thousand rupees.

1. Generation and Tracking: The registered person or transporter generates the e-way bill in FORM GST EWB-01. For multiple consignments in one conveyance, a transporter may generate a consolidated e-way bill in FORM GST EWB-02. The information furnished in Part A of FORM GST EWB-01 is made available to the registered supplier for use in furnishing details in FORM GSTR-1.

2. Verification and Detention: The person in charge of a conveyance must carry the relevant documents (invoice/bill of supply/delivery challan) and a copy of the e-way bill. If a conveyance is intercepted and detained for a period exceeding thirty minutes, the transporter may report this by uploading the information in FORM GST EWB-04 on the common portal. The proper officer must record a summary report of inspection in Part A of FORM GST EWB-03 within twenty-four hours, and the final report in Part B of FORM GST EWB-03 within three days.

III. Administration and Judicial Processes

Demand and Recovery. A summary of orders creating demand (including tax, interest, and penalty under various sections, such as penalty under Section 125, detention under Section 129, or confiscation under Section 130) must be uploaded electronically in FORM GST DRC-07. This electronic summary serves as the official notice for recovery.

Appeals and Revision. Appellate proceedings require submission of applications detailing the case under dispute, including classification, period, and amounts of tax, interest, penalty, and fees disputed. Upon issuing an order, the Appellate Authority or Revisional Authority must issue a summary of the order confirming the final demand amount in FORM GST APL-04.

Documentary Presumption. Legally, any document produced under the Act, seized, or received from outside India, when tendered in evidence, shall be presumed by the court to be true in its contents and signature authenticity, unless proven otherwise. Electronic information stored in any device is also deemed a document and admissible as evidence.

IV. GST Audit Framework and Practices

The Model All India GST Audit Manual (GSTAM) provides comprehensive guidance for audit officers.

Audit Planning and Execution: Audit is selected primarily based on risk assessment criteria. The process begins with issuing the audit notice (FORM GST ADT-01), followed by a desk review to identify high-risk areas, culminating in the approval of a detailed Audit Plan (Annexure 5 format). The examination phase involves verifying returns against mandatory accounts. Records required for scrutiny often include financial statements (Balance Sheet, P&L Account, Cash Flow Statement).

Reporting and Follow-up: Discrepancies found during the audit are formally communicated to the Registered Taxpayer (RTP). A Draft Audit Report (DAR) is prepared, followed by the Final Audit Report (FORM GST ADT-02). The FAR is issued, preferably electronically, within 30 working days of the DAR approval. If the tax, interest, and penalty confirmed in the FAR remain unpaid after 30 days, demand and recovery proceedings may be initiated.

V. Recent GST Council Facilitation Measures (56th Meeting)

The GST Council's recommendations, released in September 2025, focus on trade facilitation and dispute resolution.

1. Dispute Resolution: The Goods and Services Tax Appellate Tribunal (GSTAT) is expected to become operational for accepting appeals before the end of December 2025. A recommendation sets a deadline of June 30, 2026, for limiting the filing of backlog appeals to the Principal Bench of the GSTAT.

2. Refund Simplification: The Council recommended introducing a risk-based provisional refund system, granting 90% of the claimed refund arising out of the Inverted Duty Structure (IDS), similar to the mechanism for zero-rated supplies. This provision is slated for operationalization by November 1, 2025.

3. Discounts and ITC: The Council recommended clarifying that when post-sale discount is provided via a financial or commercial credit note, the recipient is not required to reverse Input Tax Credit. The Council also recommended omitting the requirement of establishing the discount in terms of an agreement entered into at or before the time of supply for issuing credit notes relating to discounts

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