Scrutiny Assessment under GST

The CGST Act, 2017 numerates various kinds of assessment.  They are:-

1. Self - assessment (Sec 59)

2. Provisional assessment (Sec 60)

3. Scrutiny assessment (Sec 61)

4. Best Judgements - in this there are two types of assessements -

    a. Assessment of non filers of return  (Sec 62)

    b. Assessment of Unregistered Persons (Sec 63)

5. Summary assessment (Sec 64)

I will hereby discuss the case of Scrutiny Assessment which is covered under section 61. 

Sub section 1 of section 61 states that - 

• the proper officer may scrutinise;
• the return and related particulars furnished by the registered person;
• to verify the correctness of the return;
• and inform him of the discrepancies noticed, if any;
• and seek explanation thereto.

Comments - The adjudicating officer can open scrutiny return based on the particulars submitted by the registered taxpayer in his return.  If he finds any discrepancy apparent from the record, he can seek explanation from the taxpayer. However, at this stage the officer cannot demand for any books of accounts or details which are not directly related to his query.  

Since the officer can seek explanation based on any discrepancy, it becomes important to understand what could all be covered under "discrepancy"? In my opinion, some of the discrepancy could be:

• any mathematical error;
• any human error such as entry in wrong table or column;
• huge difference between tax liabilities of various months;
• Difference between ITC Claimed with the figures appearing in GSTR 2A;
• Difference between turnover declared in GSTR 3B with those filed in GSTR 1;
• Pending unpaid liability 

The Adjudicating officer will thereafter seek explanation from the taxpayer. The explanation at this stage would only be limited to the discrepancy observed.For example, in case there is difference between the turnover figures of GSTR 3B with those of GSTR 1 for the same tax period, the explanation in this case would constitute only reconciliation of sales figures for the tax period under consideration. 

Based on the explanation. the adjudicating officer can accept or reject the application. If he accepts the explanation, no further action shall be taken in this regard and the registered person would be informed accordingly. (Subsection 2 of section 61)

However, if 

• no explanation is offered; or
• the adjudicating officer do not find the explanation satisfactory; 
• within a period of 30 days from the date of communication of such discrepancy or any such further period as may be permitted by him ( the time period to seek explanation cannot be less than 30 days); or
• where the registered person, after accepting the discrepancies;
• failed to take the corrective measure;
• in his return for the month in which the discrepancy is accepted ( and not the month in which the discrepancy is found by the Adjudicating Officer or for the month for which discrepancy is observed);

the officer may initiate appropriate action, including

• Audit u/s 65
• Special Audit u/s 66
• Inspection, Search & Seizure u/s 67
• Demand notice u/s 73
• Demand notice u/s 74                                       (Subsection 3 of section 61)

Comments - The proper officer may reject the explanation offered by the registered person and may initiate the proceedings as stated above.  The law does not state that the officer would pass an order before initiating the above proceedings. 

The law states that the registered taxpayer need to correct the discrepancy in the month in which he has  accepted the discrepancy. For example, if the officer finds a mismatch in data for the month of April 2018 in the month of August 2018, and informs the registered taxpayer accordingly. If the taxpayer accepts the discrepancy in the month of September, then he need to correct the discrepancy when he files the return for September, which, if he has opted for monthly return filing, would be 10th/20th October.

It may be noted that nowhere in the entire section a time limit has been set for issue of scrutiny notice.  Few authors are of the opinion that the time limit for issue of scrutiny notice would be the maximum time period of the consequences that flows out of section 61, which is under section 74. Section 74(10), states that a demand can be raised within a period of 5 years from the due date of furnishing annual return for the financial year to which the tax paid or short paid or input tax credit wrongly availed or utilised relates to, thus a scrutiny notice can be issued for a period of 5 years.  In absence of clear timeline, this provision is susceptible to legal scrutiny.

Thank You

A Great Saturday!

It was a usual saturday, as always, a lazy one. Getting up late, enjoying tea time with my father in law (that's my favorite time), stretching, yawning time & again. Since my daughter's summer vacations has been declared, so there was no rush to wake her up & finish up household stuff. No school, no office either for me or my husband! AAh! what a day it was. I desperately wait for weekends coz I get to read newspaper, which due to my strict schedule I am not able to do it regularly. After having a heavy breakfast, suddenly came an idea to go for a movie. The choice was not difficult as we have watched Raazi a day before. The next awesome movie released this week was 102 not out. So without any further delay I quickly booked 3 tickets for it. Thanks to BMS, it just happened in 2 min. The movie show was at 12:40pm and it was already 12:05 pm. So we literally had just 15 min to get ready & reach the theatres. 15 min, with kid! Suddenly mere ander ki hindustani aurat jaag gyi and there I was, ready with bag & baggage in just 10 min! I pat my back for such impossible achievements! I mean just think getting your child to understand that you are going in another 15 min (they look like kuch bhi ho jaye, hum to nhi ready honge!), changing their diapers ( bacchon ko right time motion ate hain, just when you are in utmost hurry), dressing them, combing their hairs ( this part is like a cat fight), and getting ready yourself. I generally don't go for make ups except the basic ones but deciding a dress is such a task! Adhe ghante to bas isi ke liye chahiye! Finally we all threw ourselves in the car and rushed to the theatre. Aaj tak to Lucknow main koi movie time se start nhi hui, but that day it was bang on time! We were late by 5 min and missed the initial part. Chalo koi nhi, quickly we got ourselves settled and watched an awesome performance by Amitabh Bacchan & Rishi Kapoor. After the movie we did some shopping and returned back home. It was 3 :15 by that time. In my mind a clock was ticking. Today I had to go for Linkedin Local connect at 4:30pm. While serving the lunch a lot many questions were going through my mind. What it would be like, another networking event? Lots of formalities, bhashan baazi and all that stuffs or would it be different? I had attended another networking event & I tell you it was damn boring! So I was bit skeptical. But, then I moved out to get there. Played my FM and Vroom!

I reached my destination in time. Met few participants on the entry gate, few on the lift and as soon as the lift door opened at the area, whoo..so many people were already there. It was a book cafe area, a nice one. The ambience itself lifted the mood that this is not going to be a formal event. I started interacting with people there, and many of them recognised me, thanks to the whatsapp photo introduction a day before on our whatsapp group. Everyone met with smile & excitement! There were all sorts of people, young & old, from diverse backgrounds, IT, HR, Entrepreneurs, Lawyers, start ups, doctors, a CA myself, exporters, Importers, education and what not. People with such diverse backgrounds, who after working for many years in corporate world, left their job, and came back to Lucknow, their hometown to pursue their dream. After the initial tea session, the organisers asked us to introduce ourselves to other people in 30 sec.  I just couldn't believe such crowd exists in Lucknow. I always thought it was a place of traditional businesses where people prefer to work in traditional way. Chalta hai attitude to zabardast hai yhan. Aise main ye log khan chupe baithe the? Perhaps everyone there must be thinking the same. Intro session was in mid way when the special invitee, the star guest, Mr. Jayant Krishna came. Dressed very smartly, he had a smiling face. Very politely, without making any noise, and without throwing any tantrums, he asked the organisers to continue with the intro part and that he would like to be addressed later. That's called simplicity! After we finished, he was introduced. We all looked at him in awe! Such a big achiever he was. I wondered how did organisers got his time? How did they persuaded him to attend this event? I mean, why a man of his stature would like to devote his weekend time with us, so new people? Later he told us the secret that one of the organiser was his wife's friend and that he do not want to upset his wife ( haha)! Jokes apart, I am really thankful to him for sparing his so much precious time. Then came Q&A session. Everyone put forth so relevant questions to him & the ease with which he answered them speaks volume about his experience. During one of the questions he said, one day, after I retire, I want to do for my city, my Lucknow. And my heart bleeded, as if somebody has touched a very sensitive chord.

I am not born & brought up in Lucknow. My father had been in government job so we have been moving across the state due to his postings. But I completed my CA & LL.B.(H). from here. There is altogether a different kind of attachment with this city. I also want to do something for my city, I want Lucknow to grow.  I have met people in different states who belong to UP but they have to leave their city coz of lack of opportunities. And everyone wants to return. Who wants to leave their aged parents alone? But none of our governments have worked so far on this front. I have a lot of expectations from current government, both Central & State and hopefully they understand our plight! We have everything except a strong political will. 

Anyways, the session ended. My spirits were all high! Its not that I will get some business from there but the kind of satisfaction you get when you mingle with like minded people is a different experience altogether.  And in the words of Mr Krishna - never stop trying, push for it! you will get whatever you want! The session ended with awesome snacks & tea and even more awesome memories!  

I hope such sessions happen frequently! 

Thank You!

How to determine Place of Supply of Goods - Section 7 r/w Section 10 of IGST Act

As we all know, GST is a destination based tax. Whether CGST/SGST or IGST is to be charged will depend upon whether a particular transaction is Intra State or Inter State. Whether a transaction is Intra State or Inter State will be determined by Place of supply.  Thus, the concept of "Place of Supply" is extremely important for understanding GST. The concept of Intra-State and Inter - State has been defined in IGST ACT, 2017. Section 7 r/w section 10 of IGST Act deals with Place of Supply of goods. Here I will try to analyse each section one by one.

Section 7 - defines what constitutes an Inter State Sale of goods. It states that supply of goods where the location of the supplier and place of supply (Please note it is not place of recipient of goods) are in

i) two different States; or

ii) two different union territories; or

iii) a state and a union territory, 

shall be treated as a supply of goods in the course of inter state trade or commerce.

However, this section has been subjected to provisions of  section 10 of IGST Act, 2017. It means section 7 needs to be within the framework of section 10.  Therefore, lets examine the provisions of section 10 simultaneously.

Section 10 -  It determines place of supply for goods in all cases except for Import & Export

Section 10(1)(a) - states that "where the supply involves movement of goods, whether by the supplier or the recipient or by any other person, the place of supply of such goods shall be the location of the goods at the time at which the movement of goods terminates for delivery to the recipient"

My understanding is that it covers the situation where :

• There is direct sale between seller & buyer; and
• Goods are delivered to buyer itself (not to branch or any other client)
• If the above two conditions are satisfied, then the place of supply shall be where the movement terminates for delivery, i.e. where the ownership is transferred. Please note that the Place of recipient is irrelevant. 

Let us try to understand it with an example:

• Mr A of Delhi sells goods to Mr B of Lucknow. Mr A ships the goods from his shop in Delhi to the shop of Mr B in Lucknow. In this case, since the goods moved from Delhi to Lucknow, hence Mr. A will charge IGST to Mr B in accordance with section 7 read with section 10(1)(a).

Section 10(1)(b) - states that where the goods are delivered by the supplier to a recipient (here the recipient is the person to whom goods are delivered) or any other person on the direction of a third person (it is the actual buyer, the person with whom the contract for sale has been entered into, i.e. the recipient as defined in law), whether acting as an agent or otherwise, before or during movement of goods, either by way of transfer of documents of title to the goods or otherwise, it shall be deemed that the said third person has received the goods and the place of supply of such goods shall be the principal place of business of such person

My understanding of the section is that it covers the situation where :

• there is an agreement to sell between seller & buyer (referred to as third person); and
• the buyer directs the seller to deliver the goods to some other person (referred to as recipient); then
• it will be deemed that the place of supply has been to the actual buyer and not to the person to whom goods have been delivered. Hence, for determining whether CGST/SGST or IGST needs to be charged, place of supplier & buyer holds importance. Please note that unlike section 10(1)(a), place of termination of delivery of goods holds no importance for this section.
• This is a case of Bill to Ship to transactions

Let us try to understand it with some examples:

• Mr A of Delhi sells goods to Mr B of Lucknow. Mr B directs Mr. A to deliver the goods to Mr C ( a customer of Mr A) in Delhi itself. Mr A ships the goods from his shop in Delhi to Mr C in Delhi. In this case, though the goods moved within Delhi itself, but it was on instruction of Mr B.  Hence, it is deemed that the place of supply of goods is where Mr B is located, i.e. Lucknow. Therefore, Mr. A will charge IGST to Mr B in accordance with section 7 read with section 10(1)(b). Mr B will subsequently bill Mr C and charge IGST to him. 
• Mr A of Delhi sells goods to Mr B of Delhi.  Mr B directs Mr. A to deliver the goods to Mr C ( a customer of Mr A) in Lucknow. Mr A ships the goods from his shop in Delhi to Mr C in Lucknow. In this case, though the goods moved from Delhi to Lucknow, but it was on instruction of Mr B. Hence, it is deemed that the place of supply of goods is where Mr B is located, i.e. Delhi. Therefore,  Mr. A will charge CGST & SGST to Mr B in accordance with section 7 read with section 10(1)(b). Mr B will subsequently bill Mr C and charge IGST to him. 
• Mr A of Delhi sells goods to Mr B of Lucknow. Mr B directs Mr. A to deliver the goods to Mr C ( branch of Mr B) in Delhi itself. Mr A ships the goods from his shop in Delhi to Mr C in Delhi. In this case, though the goods moved within Delhi itself, but it was on instruction of Mr B.  Hence, it is deemed that the place of supply of goods is where Mr B is located, i.e. Lucknow. Therefore, Mr. A will charge IGST to Mr B in accordance with section 7 read with section 10(1)(b). Mr B will not issue bill to his own branch but will only book the credit. In accounts, this transaction shall be recorded as mere stock transfer entry. Please note that in GST, a branch, located in another state is a distinct person under law. Hence, section 10(1)(b) would be applicable in this case. 

Section 10(1)(c)- states that where the supply does not involve movement of goods, whether, by the supplier or the recipient, the place of supply shall be the location of such goods at the time of the delivery to the recipient.

For example, 

• Bharat Limited registered in Maharashtra sold its pre-installed transmission tower(electric tower) located at Madhya Pradesh to Hindustan Limited registered in Delhi. In this case, the location of the supplier is Maharashtra, but a place of supply will be Madhya Pradesh. Hence, IGST will be levied. ( Example is originally published in bcasonline material about Place of Supply - https://www.bcasonline.org/files/res_material/resfiles/Place_of_Supply-GST.pdf). 

Section 10(1)(d) - states where the goods are assembled or installed at site, the place of supply shall be the place of such installation or assembly.

For example,

• Mr A of Delhi went to Noida (U.P) and ordered 50 ACs for his office in Delhi. The ACs are installed in Delhi. Thus, the place of supply would be Delhi and hence it would be an inter state sale. The Shopkeeper in Noida would charge IGST to Mr A. 

Section 10(1)(e) - states where the goods are supplied on board a conveyance, including a vessel, an aircraft, a train or a motor vehicle, the place of supply shall be the location at which such goods are taken on board.This provision includes those purchases which are done while traveling on a conveyance.

For example,

• Mr. Mehta is traveling on a cruise liner from Mumbai to Goa. He purchases a book from the in-house store in the cruise liner. These books were on-boarded from Mumbai. Registered place of business of the book shop is in Mumbai. Place of supply, in this case, will be Mumbai. This is an intrastate supply, and CGST and SGST will be charged. ( Example is originally published in bcasonline material about Place of Supply - https://www.bcasonline.org/files/res_material/resfiles/Place_of_Supply-GST.pdf). 

I hope I have been able to add a little clarity to the concept. I welcome and value your useful suggestions.

Thanks for reading!

Why I didn't like Padmavat

Ever since Sanjay Leela Bhansali announced his venture of Padmavati, I was super excited about the film. I have always been a fan of his movies be it HDDCS, Bajirao Mastani, Guzarish or any other. So I had a lot of expectations from this one, especially after Bajirao's fantabulous success.  Then came a sequence of controversies, right from Rajputs slapping Bhansali to latest Karni Sena episodes. I had a kind of feeling that this movie would be all about Rajput Shaan (valour) and all the controversies surrounding it are baseless. I was desperately waiting for the movie to be released. Further expectations were high as there were reports that the movie was based on the poem of Malik Muhammad Jayasi which talks about the unmatchable fighting strength of the Rajputs. After all, there were the first barriers to any foreign element trying to enter India and through their courage & strength have proved their might, time & again! So the expectations were quiet high this time. 

Therefore, last night I went to watch the movie with my family, and I must say, unlike his other ventures, this one was not up to the mark. I am no movie critic nor I have so much knowledge about the same through which I can comment on the technicalities of the film. But, as a viewer I couldn't connect with it and I have reasons for that. First of all. the narration of the story was not good. It seems so much disconnected (that may be because of editing & cuts by Censor Board). Ok! But there were certain things in this story which disturbed me. Padmavat DO NOT talk about valour, might & strength of Rajputs, In fact, a very little has been shown in this film through which one can judge about it. The original poem, on which the movie is based, talks about how Gora & Badal, two unmatchable Rajputs fought tooth & nail against Mughals in heir home! So much that the Khilji's troops were terrified that if two people can be so brave, how many would be there in Chittor! But, to my disappointment, the fighting sequence was just hardly of two minutes. What about Rana Rawal Singh? Even he didn't found a respectable place in the movie. He was seen more romancing the ladies (his two wives) than showing any skills in the battle field.  Is that the Rajputs that we have heard about? Certainly no!  Rajputs are warriors, portray them that way! 

It has MORE GLORIFIED THE OBSESSION OF A MASS RAPIST FOR OUR QUEEN ( or queens if the historians are to be believed). I mean it! Ranveer Singh has occupied more screen space than any other character in the movie.  He has been shown dark, really dark. 

There is nothing objectionable in the film, No imagination of Khilji that Rani Padmavati is trying to seduce him. I believe that its Sanjay Leela Bhansali who has himself paid for this controversy to get publicity, Any one who has seen this movie will agree with me.

BUT..BUT..BUT..there is an underlying aspect which everyone has ignored. The movies has brought back the memories of the atrocities which the Mughals did to our nation, our ladies, our children and our pride.  Who bought Islam to India, it was Mughals! and how did they tried to enforce upon us - through unleashing a wave of terror on us, They killed our people, burnt our villages, looted us, raped our women and took them away, killed children and forced us to adopt Islam & slavery. We hate them to the core! They gave Islam a totally bad reputation in India. It created an environment of fear and mistrust among Hindus & Muslims. People may argue that it was history and it holds no relevance in modern days. I disagree! I disagree because in today's scenario, though Hindus & Muslims are living peacefully, opening those wounds will only create trouble in an already hostile environment. All of India is not educated enough to just take it as a film.They associate it with their honor. Why play with that?  This film, mark my words, will further develop rift in already divided society. Most of the impact is on the lower strata of the society, people who are uneducated, who get swayed by provocative speeches and who can be manipulated easily. 

How could this have been stopped, just by showing the Rajput valour more than the Alauddin Khilji's negativity. Nation is first! I sincerely believe that Muslims should aggressively oppose this movie rather than Rajputs because Khilji do not represent Islam or Muslims in India. He only represents a demon who once ruled India, a black period for all of us. Such cruel people have no religion, But people will associate it with it only. Very Sad! 

PS : I do not ask to ban it, neither I support the violent protest that is happening across the country. Views are personal. Some may agree, some may not! I welcome both. 

E Way Bill - generation on web

Pilot project on e - way bill has been started from 16th January 2018 and would be compulsory from 1st February 2018. That means any movement of goods either within the state or outside the state can only happen with the generation of way bill. It is therefore, inevitable to be aware of the procedure for generating way bill. 

Below is the procedure to generate it.:

E-way bills in EWB-01 can be generated by either of two methods:

1. On the Web
2. via SMS

On the web :

Step 1: Go to web address : ewaybill.nic.in

Step 2: Click on ‘e Way Bill Registration’ below Login

Step 3: Enter the GSTIN and captcha code and press 'Go'.

Step 4: Details uploaded from the GST portal would automatically appear on the screen. If you wish to change it, click 'Update from GST common portal'.  Else click 'Send OTP'. 

Once you get registered follow the steps below:

Step 5: Login to e-way bill system.

Enter the Username, password and Captcha code, Click on ‘Login’.

Step 6: Click on ‘Generate new’ under ‘E-waybill’ option appearing on the left-hand side of the dashboard.

Step 7: Enter the following fields on the screen that appears:

1) Transaction Type:

Select ‘Outward’ if you are a supplier of consignment

Select ‘Inward’ if you are a recipient of consignment.

2)  Sub-type: Select the relevant sub-type applicable to you:

If transaction type selected is Outward, following subtypes appear:

If transaction type selected is Inward, following subtypes appear:

Note: SKD/CKD- Semi knocked down condition/ Complete knocked down condition

3) Document type: Select either of Invoice / Bill/ challan/ credit note/ Bill of entry or  others if not Listed

4) Document No. : Enter the document/invoice number

5) Document Date: Select the date of Invoice or challan or Document.

Note: The system will not allow the user to enter the future date.

6) From/ To: Depending on whether you are a supplier or a recipient, enter the To / From section details.

Note: If the supplier/client is unregistered, then mention ‘URP’ in the field GSTIN, indicating that the supplier/client is an ‘Unregistered Person’.

7) Item Details: Add the details of the consignment (HSN code-wise) in this section:

1. Product name

1. Description

1. HSN Code

1. Quantity,

1. Unit,

1. Value/Taxable value

1. Tax rates of CGST and SGST or IGST (in %)

1. Tax rate of Cess, if any charged (in %)

Note: On the implementation of E-way bills, Based on the details entered here, corresponding entries can also be auto-populated in the respective GST Return while filing on GST portal. 

8) Transporter details: The mode of transport(Road/rail/ship/air) and the approximate distance covered (in KM) needs to be compulsorily mentioned in this part.

Apart from above, Either of the details can be mentioned:

1. Transporter name, transporter ID, transporter Doc. No. & Date.

OR

2. Vehicle number in which consignment is being transported.

Format: AB12AB1234 or AB12A1234 or AB121234 or ABC1234

Note: For products, clients/customers, suppliers, and transporters that are used regularly, first update the ‘My masters’ section also available on the login dashboard and then proceed.

Step 8: Click on ‘Submit’. The system validates data entered and throws up an error if any.

Otherwise, your request is processed and the e-way bill in Form EWB-01 form with a unique 12 digit number is generated.

The e-way bill generated looks like this:

Print and carry the e-way bill for transporting the goods in the selected mode of transport and the selected conveyance.

You can print the e-way bill anytime as follows:

Step-1: Click on ‘Print EWB’ sub-option under ‘e-Waybill’ option

Step-2: Enter the relevant e-way bill number -12 digit number and click on ‘Go’

Step-3: Click on ‘Print’ or ‘detailed print’ button on the EWB that appears:

Hope the article helps. 

Thank you!  

Reunion with my love.

It's been 6 months since I last wrote my last blog. I have been missing it badly. But life was so busy that I hardly found anytime to write. Every night when I used to retire for bed, a thought of my blog would always come to me. Lot many topics, ideas, discussions came to my mind...but none could reach my laptop ( or mobile). So much was my occupation in the past 6 months! It was something i was missing dearly. I have realised  writing is not only my hobby, it is natural refreshment for me.  I may be so much expressive  with my speech or expressions, but i feel so  light when i write it out. Now I am back, back to my love of writing. Hope to connect with my readers again! Happy to be back again!