Tattvam Chandigarh Branch GST Presentatrion-25th Nov.,2022

• Interpretational
issues raised by GST

Authorities
• Practical case studies
on GSTR 9 and 9C
CA Tushar Aggarwal CA Pitam Goel
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Departmental notices for difference between
GSTR-2A and GSTR-3B – Whether reversal of
ITC required ?
Legal provisions–GST Assessment & Audit
Type Description Chapter Section- CGST Act Rule
Self Assessment XIII 59 ----
Provisional Assessment XIIII 60 98
Scrutiny of Returns XIIII 61 99
Assessment Assessment of Non-filers of

XIIII 62 100
returns
Assessment of unregistered
XIIII 63 100
persons
Summary Assessment in
XIII 64 100
certain special cases
Audit Audit by Department XIV 65 101
Special Audit by
XIV 66 102
Department
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Relevant Period
1 01.07.2017 till 08.10.2019
2 09.10.2019 till 31.12.2021
3 Post 01.01.2022
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Categories of Vendors
1. B2B supplies not reported in

GSTR 1 by mistake.
2. B2B supplies reported as B2C by

mistake
Vendor has GSTR 3B has
filed GSTR 3B not been filed
3. B2B supplies reported with
wrong GSTIN by mistake
4. Invoice in name of transferor

Procedural lapse cannot deny substantive benefit
This view may be

taken in scenarios
where the supplier
has paid tax in
GSTR-3B but Mangalore Chemicals &
omitted to report Hospira Health Care India
tax invoice in Fertilizers Ltd., 1991 (55) ELT
P. Ltd. 2016 (340) ELT 668
GSTR-1 437 (S.C.)
(Madras)
The mere fact that it is statutory
It held that a procedure
does not matter one way or the
should not run contrary to the
other. There are conditions and
substantive right in the policy.
conditions. Some may be
If the procedural norms are in
substantive, mandatory and
conflict with the policy, then
based on considerations of
the policy will prevail and the
policy and some others may
procedural norms to the
merely belong to the area of
extent they are in conflict with
procedure. It will be erroneous
the policy, are liable to be
to attach equal importance to
held bad in law
the non-observance of all
conditions irrespective of the
purposes they were intended to
serve.
6
Legal Background
Section 16
Payment of
Possession of tax by
Tax Invoice or supplier Payment of
debit note or tax by
any other
valid
supplier
document Section 16(2)(c)
• subject to the provisions of
Credit to be section 41 / 43A,
Receipt of
taken by 20th • the tax charged in respect of such
goods or
October of
next FY
services supply
• has been actually paid to the
Government,
• either in cash or through utilization
Payment to of input tax credit admissible in
Furnished the respect of the said supply
vendor within
return
180 days

7
Is Reconciliation legally required?
Section 42(3) – Matching,

Section 41 Section 42(5)
reversal and reclaim of ITC
The provisions related to matching, The amount in respect of which any

reversal and reclaim of Input Tax discrepancy is communicated under
Every registered person to credit. Section 42(3) of the CGST Act sub-section (3) and which is not
provisionally take the credit of eligible states that where the input tax credit rectified by the supplier in his valid
input tax, as self-assessed, in his claimed by a recipient in respect of an return for the month in which
return which shall be credited in his inward supply is in excess of the tax discrepancy is communicated shall be
electronic credit ledger. declared by the supplier for the same added to the output tax liability of
supply or the outward supply is not the recipient, in such manner as
declared by the supplier in his valid may be prescribed, in his return for
returns, the discrepancy shall be the month succeeding the month in
communicated to both such which the discrepancy is
persons in such manner as may be communicated.
prescribed.

8
Is Reconciliation legally required?
Rule 69 – Matching of ITC Rule 71
It states that any discrepancy in the claim of input tax credit in respect of
Prescribes details relating to the claim of input tax credit on any tax period, specified in sub-section (3) of section 42 and the details of
inward supplies including imports, provisionally allowed under output tax liable to be added under sub-section (5) of the said section on
section 41, shall be matched under section 42 after the due account of continuation of such discrepancy, shall be made available to the
date for furnishing the return in FORM GSTR-3. recipient making such claim electronically in FORM GST MIS-1 and to the
supplier electronically in FORM GST MIS-2 through the common portal on
or before the last date of the month in which the matching has been
carried out.
On perusal of the aforesaid provisions, it can be said that there is a specific mechanism for reversing the credit in case of the
discrepancy in the ITC availed by the recipient against the output liability of the supplier. However, the mechanism has been kept in
abeyance due to some technical glitches in the GSTN System.
✓ Condition laid down under Section 16(2)(c) is subject to the provisions of Section 41 read
with Rules 69 and 71
✓ ITC reversal mechanism as laid down in Section 41 read with Rules is kept in abeyance

9
Possible Contentions
• Section 16(2)(c) is arbitrary as it doesn’t differentiate between tax evaders and bonafide taxpayers
• Bonafide recipient should not be penalized for non-payment of tax by supplier
• Lex non cogit ad impossibilia: The law cannot compel the doing of impossibilities
• No mechanism to verify whether supplier has actually paid tax to the Government
• Denial of ITC to buyer due to default of supplier would tantamount to shifting the incidence of tax
from supplier to the buyer which is unconstitutional
• Buyer would pay double tax on same transaction i.e., one at the time of purchase and another at the
time of ITC reversal
• If buyer is denied ITC, it would be wholly unjustified and this causes the deprivation of the
enjoyment of the property which is violative of Article 300A of the Constitution of India

13
Jurisprudence under erstwhile indirect tax regime
In the event that selling dealer fails to deposit the tax collected by him from
the purchasing dealer, the remedy for the department would be to proceed
Arise India Ltd against the selling dealer for recovery of such tax. Further, in cases where
(Delhi High Court) the department is satisfied that there is collusion of purchasing and selling
dealer then proceeding under Section 40A of the DVAT Act can be initiated
It was held that “the benefit of input tax cannot be deprived to the
Onyx Design purchaser dealer, if the purchaser dealer satisfactorily demonstrates that
(Karnataka High
Judgments while purchasing goods, he has paid the amount of tax to the selling dealer.
under VAT Court)
If the selling dealer has not deposited the amount in full or a part thereof, it
would be for the revenue to proceed against the selling dealer.”
Gheru Lal Bal
Chand (Punjab And It held that that no liability could be fastened on a buyer on account of non-
Haryana HC) payment of tax by the seller in the treasury unless a case of fraud is made
out by the Revenue, or unless collusion/connivance between the seller and
buyer is established.
11
M/s D.Y. Beathel Enterprises vs State Tax Officer
2021-VIL-308-MAD
Authorities cannot initiate recovery proceedings against a purchaser of goods due to the omission
to remit tax to the Government on part of the seller
Facts:
The petitioners are traders in Raw Rubber Sheets. They had purchased goods from their seller and made payments thereto,
including the tax component. Based on the returns filed by the seller, the petitioners availed input tax credit of the GST paid.
Later, during inspection by the authorities, it came to light that the seller did not pay tax to the government, however show
cause notice was issued to the petitioner. Consequently, without involving the sellers, the impugned orders came to be passed
levying the entire liability on the petitioners to reverse the credit already taken due to non-payment of tax by their seller.
Therefore, the petitioner have challenged the said impugned through this writ petition.
Held:
The Hon’ble High Court while allowing the Writ Petition, held the following:
• When it has come out that the seller has collected tax from the petitioners, the omission on part of the seller to remit the
tax in question must have been viewed seriously and strict action ought to have been initiated against them
• The impugned orders suffer from fundamental flaws of non-examination of seller in the enquiry and non-initiation of
recovery action against seller in the first place
Therefore, the impugned orders are quashed and the matter is remitted back to the file of the authorities

M/s BRIGHT STAR PLASTIC INDUSTRIES VS. ADDL. COMMRS OF SALES
TAXES, 2021-VIL-865-ORI
To attribute a case of fraud in availing ITC from non-existence supplier, the department has to satisfy a
threshold of showing that purchaser indulged in transactions with full knowledge
Facts:
The petitioner is engaged in the business of manufacturing and trade of Poly Vinyl Chloride (PVC), iron scraps etc. A Show Cause
Notice were issued to petitioner under Rule 22(1) of the OGST Rules, 2017 for cancellation registration on the ground that
“petitioner have claimed ITC (Input Tax Credit) of Rs. 2,04,650,06 against fake invoices issued by non-existent supplier".
Thereafter, the petitioner applied under Section 30 of the OGST Act for revocation of the cancellation of registration which got
rejected by the authority. Hence, this Writ Petition.
Held:
The Hon’ble High Court held that:

• On the date the purchases took place there was no means for the Petitioner to know that entity which had a valid GST number,
was in fact non-existent
• To attribute fraud in such circumstances to the Petitioner, as a purchasing dealer, the Department would have to satisfy a high
threshold of showing that the purchaser indulged in the transactions with the full knowledge that the selling dealer was non-
existent
• The Department has failed to show that the Petitioner as a purchasing dealer deliberately availed of the ITC in respect of the
transactions with an entity knowing that such an entity was not in existence
Therefore, the impugned order rejecting the Petitioner's application for revocation of its cancellation of registration and the
impugned appellate order rejecting the Petitioner's appeal are set aside.

M/S LGW INDUSTRIES LTD. VS. UOI 2021-VIL-868-CAL
Availment of Input Tax Credit cannot be denied on the ground that purchases made by
petitioners are from non existing suppliers
Facts: The
FACTS HELD
Hon’ble High Court held that:
The petitioners in this case had approached the Hon’ble High
• The Hon’ble High Court subject to further verification observed
Court against the series of notices issued by the department
that it cannot be said that the petitioners were at fault in
wherein, the department had disallowed the petitioners their
complying with the obligations required under GST law before
right to claim the input tax credit on the following ground:
entering the transactions in question or for verification of the
• suppliers from the whom the petitioners/buyers are
genuineness of the suppliers in question
claiming to have purchased the goods in question are all
• Further, the Hon’ble Court has decided to accept the writ petition
fake and non-existing,
and remanded the matter back to the department to consider the
• the bank accounts opened by those suppliers are on the
cases of the petitioners on the issue of their entitlement of benefit
basis of fake documents and petitioners’ claim of benefit
of input tax credit
of input tax credit are not supported by the relevant
• It has been held that petitioners shall be given the benefit of input
documents,
tax credit in question after fulfilling following conditions:
• petitioners have not verified the genuineness and identity
• Upon verification it is found out that transactions in question
of the aforesaid suppliers who are registered taxable
are genuine and supported by valid documents
persons (RTP) before entering into any transaction with
• Payments on purchases in question along with GST were
those suppliers; and
actually paid or not to the suppliers
• the registration of suppliers in question has already been
• Transactions in question were made before the cancellation
cancelled with retrospective effect covering the
of registration of those suppliers
transactions period in question
• Duly considering the judicial precedents referred in the
present matter

Rule 36(4) whether contrary to Section 16
Existence of a enabling section in the

statute for the purpose of making Rule
is necessary which is absent in case of
Rule 36(4) 1 Whether general power under
Section 164 can be used for the
Decisions
a) Academy Of Nutrition Improvement vs.
2 purpose of Rule 36(4)?
Union of India The Bombay High Court in case of Nelco

b) General Officer … vs Subhash Chandra Limited v. Union of India has held that
Yadav & Anr. (1988 AIR 876) Section 164 of the CGST Act is wide
c) State Of Karnataka And Anrvs H. enough to enable the framing of rules
Ganesh Kamath Etc. (1983 AIR 550) fixing a time limit to claim Transitional
d) Sukhdev Singh & Ors vs Bagatram ITC
Sardar Singh (1975 AIR 1331)

Amendment in Section 16(2)
No registered person shall be entitled to the credit of any input tax in respect
of any supply of goods or services or both to him unless,
1. he is in possession of a tax invoice or debit note

2. (aa) the details of the invoice or debit note referred to in
clause (a) has been furnished by the supplier in the
statement of outward supplies and such details have been
communicated to the recipient of such invoice or debit note
in the manner specified under section 37,
3. he has received the goods or services or both
4. the tax charged in respect of such supply has been actually paid to
the Government,
5. he has furnished the return under section 39

Section 16 (2)(aa) of CGST Act, 2017
The Government vide Notification No. 39/2021 dated 21.12.2021 has made effective few provisions of Finance Act, 2021 from 01.01.2022
which are summarized as under:
A Insertion of additional condition for availing Input Tax Credit under Section 16
❑ Section 109 of Finance Act 2021 brought in order to amend Section 16 of CGST Act has now been made effective from 01.01.2022
❑ Section 109 of Act of 2021 has inserted sub-clause (aa) in section 16 of the Central Goods and Services Tax Act, 2017 in sub-section
(2), after clause (a) which is reproduced below:
“(aa) the details of the invoice or debit note referred to in clause (a) has been furnished by the supplier in the statement of
outward supplies and such details have been communicated to the recipient of such invoice or debit note in the manner specified
under section 37;”

Amendment in Rule 36(4) of CGST Rules, 2017
CGST rules have been amended for the 10th time in 2021 vide Notification No. 40/2021 CT dated 29.12.2021
Rule 36(4): Conditions for claiming Input Tax Credit e.f. 01.01.2022
ITC to be availed by a registered person to the extent of

1) eligible credit in respect of invoices or debit notes which have been uploaded
by the suppliers in section 37 in the statement of outward supplies in Form
GSTR 1 or using IFF; and
2) the details of such invoices or debit notes have been communicated to the
registered person in Form GSTR 2B under rule 60(7)

Effect of amendment of Rule 36 /Section 16
Effect
As per the above amendment the recipient of supply will be

able to avail the ITC w.r.t its inward supplies on fulfilment of
the following conditions:-
❑ When the said supplies are reported by the supplier in its
GSTR-1/IFF and
❑ Such supplies are reflected in the GSTR-2B of the recipient

Amendment in Section 16(2) r/w Section 38
In Section 16(2), new clause (ba) has been proposed to be

inserted as under:
“(ba) the details of input tax credit in respect of the said

supply communicated to such registered person under section
38 has not been restricted;”
Effective from enactment of Finance Bill, 2022
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Implications of amendment in Section 38 of the CGST Act
• The details of outward supply furnished by the supplier in GSTR-1 shall be made available electronically to
the recipients in auto generated statement namely GSTR-2B.
• GSTR-2B shall consist of details of inward supplies in respect of which input tax credit may be available to
the recipient.
• However, restriction shall be placed wherein input tax credit reflecting in GSTR-2B cannot be availed,
whether wholly or partly, by the recipient in the following cases:
S.
Restrictions on ITC in GSTR-2B Check mechanism on GST Portal
No.
Details of supplies furnished by the registered Clarity awaited
1. person within such period of taking registration as
may be prescribed.
Supplier has defaulted in payment of tax and such This condition can be checked from GST portal
2. default has continued for the prescribed period which provides for GSTR-3B filing status of
supplier

S. No. Restrictions on ITC in GSTR-2B Check mechanism on GST Portal
3. Output Tax payable as per GSTR-1 > output This condition can be checked from GST portal which
tax liability paid through GSTR-3B; and provides for percentage of GSTR-1 liability paid
such difference exceeds the prescribed limit through GSTR-3B. However, the limit is yet to be
prescribed.
4. ITC availed by supplier > ITC available in his Clarity awaited

GSTR-2B; and
such difference exceeds prescribed limit
5. Supplier has defaulted in discharging his tax Clarity awaited

liability in accordance with Section 49(12) i.e.,
ITC can be utilized upto a specified limit for
discharging output tax liability
6. Such other class of person as may be Yet to be prescribed
prescribed.

ITC on Gift vis-à-vis- Sales promotion
Case Studies
Poster/hoardings/brochures
Foreign trips (Voluntary) /price list
Buy one get one
Calendar/diaries/
pens/crockery
Gifts on achievement of
target:– Voluntary/ scheme

Eligibility of ITC on Gifts & Free Samples
Section 17(5)(h) Free Samples Gifts
▪ Gift ordinarily means

something which is given
Input tax credit in respect
Free samples are small and voluntarily to other
of goods lost, stolen,
packaged portion of person without
destroyed, written off, or
merchandise distributed free, consideration and the
disposed of by way of
especially as an introduction donor should not derive
gifts or free samples shall
to potential customers any advantage from such
not be available
gift.

What is Gift ?
✓ It is pertinent to mention that term ‘gift’ is not defined under the CGST Act, 2017. Hence,
recourse can be taken from parallel legislations
✓ As per Section 122 of Transfer of Property Act, 1882, “Gift” is the transfer of certain existing
moveable or immoveable property made voluntarily and without consideration, by one person,
called the donor, to another, called the donee, and accepted by or on behalf of the donee.
✓ Dictionary meanings-
▪ Merriam Webster Dictionary- “something voluntarily transferred by one person to another
without compensation; the act, right, or power of giving.
▪ Black Law Dictionary- Gift is “a voluntary conveyance of land, or transfer of goods, from
one person to another, made gratuitously, and not upon any consideration of blood or
money.”

Promotional items distributed free of Cost
BMW India Private Limited, 2021-VIL-91-AAR (HAR)
Brief facts-
Availment of input tax credit on Goods

Distributed as free of cost
CASE STUDY
Decision-
✓ Brochures / Price List /
✓ The promotional items procured by the BMW
and supplied during events on FOC basis Means of Communication
qualify as gifts
✓ The company is ineligible to take the input ✓ Diaries / Pen / Calendar

tax credit on such goods owing to restriction
under Section 17(5)(h) of CGST Act,2017

Promotional/marketing materials distributed free
of cost
M/s Page Industries Limited 2021-VIL-21-AAAR (KAR)
Under UK VAT laws , Sl.

No. 2.12of VAT Notice
700/7 specifies “point of
Observations Rulings sale display material’
that :
The ITC denied on all such “No vat is due if you

promotional and marketing items payable point of sale
The applicant in the instant case
given to the franchisees and display material to
disposes of/issues the distributable
distributors on FOC basis as they retailers, or other
goods such as carry bags, calendars,
same qualify as gift and restriction business customers, for
diaries, marketing material such as
under Section 17(5)(h) of the GST no considerations and
displays, posters etc. free of cost to
Acts. the material provides
franchisees and distributors
direct promotional
supports for your goods.
Examples includes
display stands, posters
Schedule I- Deemed supply and other similar
Permanent transfer or disposal of business assets where input tax materials.
credit has been availed on such assets

Voluntarily offered free foreign trips
Input tax credit in respect of goods lost, stolen,

destroyed, written off, or disposed of by way of gifts
or free samples shall not be available
Surfa Coats India Pvt Ltd -Karnataka AAR
▪ ITC on services procured for offering free trips is not

available as it is similar to gift.
▪ The taxpayer is not eligible to avail ITC on the inward

supplies of goods and services given as incentives in
the form of gifts of goods and services to its dealers.
Moreover, the AAR observed that free travel services
provided to its dealers without consideration would not
qualify as ‘supply’

Circular no. 92/11/2019
❑ It may be appear at first glance that one item is

being sold free of cost without any
consideration. In fact, it is not an individual
supply of free goods but a case of two or more
individual supplies where a single price is
charged for the entire supply. It can at best be
treated as supplying two goods for the price of
one.
❑ Taxability of such supply will be dependent upon
as to whether the supply is a composite supply
or a mixed supply and the rate of tax shall be
determined as per the provisions of section 8 of
the said Act
❑ ITC shall be available to the supplier for the

inputs, input services and capital goods used in
relation to supply of goods or services or both
as part of such offers.

Goods on achievement of target
Sanofi India Ltd Maharashtra AAR Clarification : Ireland Department

and Customs on Mixed Supplies
of Goods and Services:
▪ Shubh Labh Trade Loyalty Program: In this scheme, the
If there is a requirement of the
distributors/whole sellers earn reward points basis the quantity of
customer to pay a consideration in
goods purchased and goods sold by them. These points can then be
connection with the receipt of an
redeemed in the form of items, to be selected basis the availability
product, even if the supplier
of the product and reward points earned
describes part of that product as
“gift” or as being “free”, it does not
come within the term of gift for tax
▪ Brand Reminder: As an advertisement tool, the company distributes
purposes. Where there is a
products like pen, notepad, key chains etc. with their name
consideration it is always referable to
engraved on it, for the purpose of their brand promotion
all the products supplied.
Accordingly, the same will be
ITC denied as promotional items were given voluntary and not under
categorized as Mixed Supply.
contractual obligation, hence restriction under section 17(5)(h) applies
Input Tax Credit Vs Mixed Supply

Gifts on achievement of target
Moksh Agarbatti Company , 2020-VIL-97-AAR (GUJ); Biostadt India Limited, 2019-VIL-60-AAR(MAH)
Issues-
Availment of input tax credit on Goods given under incentive scheme
Decision:
❖ Free goods offered on purchase of specific quantity of goods not satisfy the condition availment of ITC under section 16
❖ Free goods offered on making payment as per defined schedule not eligible for availment of ITC under section 16
❖ No written agreement with customers
❖ Denial of ITC by AAR under sec. 17(5) in case where no GST is paid on output stage

Taxability of Cross Charge vis a vis
ISD
^
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Concept of Cross Charge
Supply of goods or services or both between related persons or between distinct

persons as specified in section 25, when made in the course or furtherance of business
Concept of distinct Persons:
Case 1: Supply between 2 different GSTN located in one or more states or union
territories.
XYZ, Gujarat GSTN - 2

XYZ, Delhi GSTN - 1
Case 2: Supply between Establishments of one person located in two or

XYZ H.O. Delhi XYZ, Project office more states.
in U.P.
Since one registration is to be considered as distinct person from other registration, company shall treat the registration supplying services
as normal vendor of the recipient. In case company is not paying its vendor anything because of force majeure clause, the same
shall apply to different registration of company as well and no requirement of cross charge shall arise.

Rule 28 – Supplies between distinct/related
persons
If value is not determinable First proviso:
under clause (a) or clause Provided that where the goods are
(b), be the value as intended for further supply as such by
determined by the the recipient, the value shall, at the
application of rule 30 or option of the supplier, be an amount
rule 31, in that order. equivalent to ninety percent of the
price charged for the supply of goods
of like kind and quality by the
recipient to his customer not being a
Be the Open Market
related person
Value of the supply.
Second proviso:
Provided further that where the
recipient is eligible to full ITC, the
value declared in the invoice shall be
deemed to be the Open market value
of the goods or
services.
If the open market value
is not available, be the
value of supply of goods
or services of like kind
and quality

Where value cannot be determined as per
previous rules
Rule 30
110% of Cost
Rule 31
Reasonable
Means
“A supplier of service can disregard Rule 30 and can apply Rule 31”

Implications on various industries
Usage of aircraft by Indian

and foreign airlines
Provision of Trucks by logistic

service providers
Provision of
Telecommunication service

Definition
Section 2 (61) of CGST Act, 2017- ISD
An office of the supplier of goods or

services or both.
The said office receives tax invoices

towards the receipt of input services
The said office distributes the credit of

GST paid on the said services to the
supplier having the same PAN as that of
the office.
The said office issues tax invoice or

other prescribed document for the
purpose of distribution of credit

Conditions for Distribution of Credit
Section 20(2) of CGST Act, 2017

The credit of tax paid on input services
The Input Service attributable to a recipient of credit,
Distributor may shall be distributed only to that
distribute the credit recipient
subject to the
following conditions,
namely:–
1
The credit on input service is attributable to
more than one recipient, credit is to be
The credit can be distributed to the
recipients of credit against a document
4 2 distributed among the recipients on pro rata
basis of the turnover of such recipients in
containing such details as may be Conditions their state during the relevant period to the
prescribed; aggregate of the turnover of all such
recipients as applicable
The amount of the credit distributed shall 5 3 The credit on input service is attributable to all
not exceed the amount of credit available
recipients, credit is to be distributed among the
for distribution;
recipients on pro rata basis of the turnover of
such recipients in their state during the relevant
period to the aggregate of the turnover of all
such recipients as applicable

Cross Charge vs ISD
Maintenance of Head Depreciation of Assets at

Audit Services Rental of Head Office
Office HO
Salary Cost of employees Accounting impairment Advertisement Interest on banking loan

at HO entries

GST IMPLICATIONS ON CORPORATE
GUARANTEE
Case Study on Corporate Guarantee
42
Guarantee for Loan Loan
Company A Company B
Bank
• Case Study 1 : Company A and Company B are not related party

• Case Study 2 : Company A is parent company of Company B
Contract of Guarantee
Section 126 of Indian Contract Guarantee is a contract to perform the promise, or discharge the liability of
Act, 1872 a third person in case of his default.
There are three parties to the contract i.e. surety, principal debtor and
Parties creditor
Consideration Anything done or any promise made for the benefit of the principal debtor
may be a sufficient consideration to the surety for giving the guarantee
Liability Liability of surety is secondary and the primary liability is on the debtor
Surety has the right to file suit against the Principal Debtor upon discharge
Right to suit
of debt or duty.
A advances a loan of Rs. 1 crore to B and C

Eg promises to A that if B does not repay the loan ,
C will repay it on his behalf
Tattvam Advisors Copyright 43
Corporate Guarantee vs Bank Guarantee
Corporate Guarantee
• Corporate Guarantee is a guarantee in which any

corporation agrees to be responsible for the
financial obligations of, or the performance of,
contractual obligations by the principal debtor to
the creditor, in the event the principal debtor fails Bank Guarantee
to discharge his obligation to the Creditor.
• It is not secured by or tied to any specific asset of • In Bank Guarantee, bank assures the third party that in
the surety. event of any non-performance by the bank’s customer, the
bank will honor the claim against the guarantee.
• Banks run risk assessments to ensure that the guaranteed
sum can be retrieved, and bank may also require a security
in the shape of cash or capital assets.

GST Legal Provisions
Section 9 : GST is to be levied

on all supply of goods or
❑ Section 7 of the CGST Act, 2017, defines the term supply and it
services or both except for
includes all form of supply of goods or services or both made or
supply of alcoholic liquor for
agreed to be made for a consideration in the course or furtherance human consumption
of business
Schedule 1 Clause 2 : Supply of goods or services
❑ Includes import of services for a consideration whether or not in or both between related persons or distinct persons
when made in course or furtherance of business
the course or furtherance of business
❑ The activities as specified in Schedule I shall be treated as supply Related Person (Explanation to Section 15)
• Any person directly or indirectly owns, control or
even if made without consideration holds 25% or more shares
• Directly or indirectly controlled by a third person
❑ Activities or transactions specified in Schedule III shall be • Together, directly or indirectly, control a third
person
treated neither as supply of goods nor services

Supply Without Consideration - Schedule I
Supply of goods or services or both between related persons or between distinct
persons as specified in section 25, when made in the course or furtherance of business
Related Persons:
• Explanation stated under Section 15: Example:
o Officers or directors of one another’s businesses Canteen services provided to
o Legally recognised partners in business employees by the employer.
o Employer and Employee
o Person directly or indirectly controls, owns more than 25
percent of outstanding voting stock or share
o One directly or indirectly controls the other
o Both directly or indirectly controlled by a third person
o Together directly or indirectly control a third person
o Members of the same family
Specific exception to the aforesaid clause:

In case, the employer supply goods or services by way of gift to its employee for a value not exceeding rupees fifty
thousand would not constitute as supply.
46
Can Corporate Guarantee be considered as supply of
services?
Whether provisions of TP be
applicable on corporate guarantee Income
given by Parent Company located Tax Act
outside India?
Micro Ink vs ACIT

Jurisprudence The guarantee were prima facie in
the nature of shareholder activity
as it was to provide, or compensate
for lack of core strength or raising
finances.
Services provided by Central or State Circular
Government to any business entity 34/8/2018 -
including PSU by way of guaranteeing GST
the loan taken from financial
institution against consideration shall
be taxable
Can Corporate Guarantee be considered as supply of
services?
Mikro Ink Limited vs ACIT

Taxability of Corporate guarantees have been a subject of dispute in the Income Tax Act,
1962 under the Transfer pricing provisions enumerated in Chapter X. It needs to be
determined if commission received/paid for corporate guarantees comes under the
scope of international transaction under section 92B.
The Court in Micro link concurring with the view of the OECD Guidance categorically
held that corporate guarantees are in the nature of quasi capital and shareholder
activities to provide or compensate for the lack of core strength of raising finances from
the banks and cannot be construed to be in nature of provision of service

Discussion Point
• Can an argument can be taken under GST that
issuance of corporate guarantee to related
parties without consideration does not qualify
Corporate as supply of services since Corporate
guarantee is entirely entrepreneurial in the
Guarantee – sense and it is issued for maximization of gains
for the recipient entity and thus the group as a
Supply of Whole?
Services?
• A guarantor does not arrange financing for the
debtor, but merely executes a
financial instrument in its favour. These
guarantees do not cost anything to the
guarantors 49
Tattvam Advisors Copyright
Can Corporate Guarantee be considered as
actionable claim?
S.III Clause 6. Actionable claims, other than lottery,

betting and gambling shall neither be considered as
supply of goods nor services
 Section 2(1) of the CGST Act:

 “actionable claim” shall have the same meaning as assigned to it in section 3 of the Transfer of
Property Act, 1882;
 Section 3 of the Transfer of Property Act:

 “actionable claim” means a claim to any debt, other than a debt secured by mortgage of
immovable property or by hypothecation or pledge of movable property,
 Or
 to any beneficial interest in movable property not in possession, either actual or constructive, of
the claimant, which the Civil Courts recognize as affording grounds for relief, whether such debt or
beneficial interest be existing, accruing, conditional or contingent.

Valuation of supply between related person
If value is not
determinable under clause First proviso:
(a) or clause (b), be the Provided that where the goods are
value as determined by the intended for further supply as such
application of rule 30 or by the recipient, the value shall, at
rule 31, in that order. the option of the supplier, be an
amount equivalent to ninety percent
of the price charged for the supply
be the Open Market
of goods of like kind and quality by
Value of the supply.
the recipient to his customer not
being a related person
Second proviso:
Provided further that where the
if the open market value is not recipient is eligible to full ITC, the
available, be the value of supply value declared in the invoice shall
of goods or services of like kind be deemed to be the Open market
and quality value of the goods or
services.

Valuation of Corporate Guarantee
52
Corporate Guarantee not similar to Bank Guarantee

Bombay High Court in the case of CIT vs Everest Kanto Cylinders Ltd held
01
that the bank guarantees are different from Corporate Guarantee and
therefore value cannot be compared with commission rate of banks
Valuation of Safe Harbor Rules

Corporate 02 In case of corporate guarantee provided to wholly
owned subsidiary, commission or fees shall be 1%
Guarantee p.a on the amount guaranteed
Tattvam Comments
In order to avoid any dispute, company shall take the services of
03
registered valuer for arriving at the value of corporate guarantee.
Further, apart from safe harbor rules, other methods can be used like
Interest Yield Approach, Loss Given Default Approach, Credit Default
Swap Approach etc.
Supplies between Related/Distinct persons
Common Trademark (E.g. TATA, Common Management
Reliance)
Executives and management working for the
Whether trademark registered in the
entity as a whole be considered as provision of
name of holding company and used by
services between two related persons/distinct
various subsidiary or associate company
be regarded as supply of services by
persons
holding company to subsidiary or

associate company?
After sale services provided by branches

Common Infrastructure
Goods supplied by the head office to customers across
It basically includes sharing of
India whilst warranty services are provided by the
infrastructure/resources with the other
branches located in respective states. In this case,
party. Example: Accounting for all the
whether services have been supplied by branches to
branches being done at HO etc.
head office?

ITC on Employee Related Expenses
Employee benefits
Food & beverage
Hotel and travel

expenses for business
travel
Uniforms/gloves &
helmets/safety
shoes/office laptop

Relevant provisions
Food and beverages, outdoor catering, beauty treatment,

Section 17(5)(b)(i) health services, cosmetic and plastic surgery, leasing, renting
or hiring of motor vehicles, vessels or aircraft referred to in
clause (a) or clause (aa) except when used for the purposes
specified therein, life insurance and health insurance
Section 17(5)(g) Goods or services or both used for personal consumption
Goods lost, stolen, destroyed, written off or disposed of by

Section 17(5)(h)
way of gift or free samples;

Employee benefits
Uniforms/gloves & helmets/safety shoes/office laptop
❖ Not excluded under section 17 (5)(g) - exclusion on Whether ITC is allowed on account of
account of personal consumption is not qua the business use only ?
employees but is qua the taxpayer
❖ Not excluded under section 17(5)(h)- not gift as to

be used during their employment, does not have
any economic value, used for official purpose

Employee benefits
Hotel and travel expenses for business travel
ITC on Business Travel ITC on Hotel Bill
Business purpose-not
personal consumption Room Charges Food
ITC Available on
• Airfare No ITC on
ITC allowed subject food is
• Rail fare
to fulfillment of allowed
other conditions i.e.
POS

Employee benefits – Canteen Services
Canteen services provided to employee at subsidized rate
• Definition of business includes any activity or transaction in connection with or incidental or ancillary to any trade,
commerce, manufacture or profession
• The activity undertaken in the form of supply of food to the workers at the subsidized rate qualifies as supply on which GST
is payable at 5%.
• ITC on food and beverage still not eligible because of restriction under Rate Notification
Free food and beverage
• Free supply of food and beverage to employees in the course of or in relation to his employment is not to be treated as
deemed supply
• ITC not available of such food and beverage provided to employees unless mandatory under some law.

ITC on Immovable Property
Legal Provisions
Blocked Credit Plant and Machinery
Section 17(5)(c) – Works Contract ▪ Means apparatus, equipment, and

Services when supplied for construction of machinery fixed to earth by foundation
immovable property (excluding Plant and or structural support that are used for
Machinery) except where it is an input making outward supply of goods or
service for further supply of works contract services or both and includes such
service foundation and structural supports
Section 17(5)(d) – Goods or services or ▪ Excludes-

both received by taxable person for a) land, building or any other civil
construction of immovable property structures;
(excluding Plant or Machinery) on his own b) telecommunication towers; and
account c) pipelines laid outside the factory
premises

Case Study: Construction of Factory
Optimization of credit
Registered Person
Land Civil Work Immovable Plant & Machinery Movable Plant & Machinery
Civil
Foundati
Factory Lift/ Project
Free Hold Leasehold Buildings? on/ Computer Furniture
Sheds? HVAC P&M
Support
structure
Pre-Construction During Construction Post Construction

Pre- Fabricated Structure
Pre-fabricated technology is a method construction that are made in pieces and assembled at the
construction sites
Can be dismantled and reconstructed at a different location saving a lot of time, effort and cost
Whether Pre-fabricated structures qualify as 01

immovable property?
02
Whether credit can be allowed in respect
of such structures? 03 Prefabricated building classified under
HSN 94060011- Movable or immovable?

Case Study: ITC on construction services for
leasing
ITC under lease model
Safari Retreats Pvt. Ltd. vs. Chief Commissioner of CGST 2019-VIL-223-ORI
Issue Issue
Availment of input tax credit on construction services of shopping mall which is to be used for leasing
Decision
▪ Restriction unjust & contrary to basic rationale of GST

➢ The petitioner is not using the immovable property ‘on his own account’ but letting out property. Hence, ITC should not
be restricted
▪ Section 17(5)(d) is to be read down and the narrow restriction as imposed, reading of the provision by the Department,
is not required to be accepted
SC admitted SLP without any stay of order

ITC Reversal – Payment not made within 180
days
Reversal on account on non payment in 180 days
Earlier Provision Amended Provision
Rule 37:
Rule 37: A registered person, who has availed of input tax
1. A registered person, who has availed of input tax credit on any inward supply of goods or services or
credit on any inward supply of goods or services or both, other than the supplies on which tax is payable
both, but fails to pay to the supplier thereof, the value on reverse charge basis, but fails to pay to the supplier
of such supply along with the tax payable thereon, thereof, the amount towards the value of such supply
within the time limit specified in the second proviso to along with the tax payable thereon, within the time
sub-section (2) of section 16, shall furnish the details limit specified in the second proviso to sub-section(2)
of such supply, the amount of value not paid and the of section 16, shall pay an amount equal to the
amount of input tax credit availed of input tax credit availed in respect of such supply
proportionate to such amount not paid to the along with interest payable thereon under section
supplier in FORM GSTR-2 for the month immediately 50, while furnishing the return in FORM GSTR-3B for
following the period of one hundred and eighty days the tax period immediately following the period of one
from the date of the issue of the invoice: hundred and eighty days from the date of the issue of
the invoice:
2. The amount of input tax credit referred to in sub- 2.Where the said registered person subsequently
rule (1) shall be added to the output tax liability of the makes the payment of the amount towards the value
registered person for the month in which the details of such supply along with tax payable thereon to the
are furnished." supplier thereof, he shall be entitled to re-avail the
input tax credit referred to in sub-rule (1).
68
Reversal on account on non payment in 180 days
Earlier Provision Amended Provision
Rule 37:
Rule 37:
3. The registered person shall be liable to pay interest
Omitted.
at the rate notified under sub-section (1) of
section 50 for the period starting from the date of
availing credit on such supplies till the date when
the amount added to the output tax liability, as
mentioned in sub-rule (2), is paid.
Points to Ponder:
1. Reversal in case of proportionate payment to the vendor?

2. Interest payable under section 50(1) or section 50(3)?
3. Period for which interest is payable?
69
Practical case Overview of GSTR 9
01
studies on GSTR 9 and 9C - Outward
and 9C 02 Case Studies –

Outward Supplies
03 Overview of GSTR 9
and 9C - Inward
04 Case studies –
Inward Supplies
Overview of GSTR 9
Parts Reporting Head Table 1-3
6 19 Part 1 –
Basic
Sub-bullet
Dash
Bullet
Details
Part 6 –
Part 2 - Table 4-5
Table 15-19 Other
Liability
Info
GSTR 9
Part 3 –
Part 5 -
Input Table 6-8
Adjustm
Table 10-14 tax
ents
Credit
Part 4 –
Tax Paid
Details
Table 9

OUTWARD SUPPLY
Details of GSTR 9
Total 19
▪ Reporting
Table 4: Details of Outward supplies & Inward Supplies on which tax is payable
Outward ▪
heads
Table 5: Details of Outward supplies on which tax is not payable
▪ Table 10 & 11: Supplies/tax declared/reduced through Amendments
Details
▪ Note: Reconciliation of GSTR1, GSTR 3B and Books important before filling of
information in above tables
GSTR9- ▪ Table 6: Details of ITC Availed
Inward ▪ Table 7: Details of ITC reversed

Annual
3B FILED Details ▪ Table 8: Reconciliation of ITC availed with GSTR 2A
Return ▪ Table 12 &13: Details of ITC availed/reversed through Amendments

▪ Note: Reconciliation of GSTR2A, GSTR 3B and Books important before
filling of information in above tables
▪ Basic Details, Details of Taxes Paid, Details of Demands and Refunds

Others ▪ Information on supplies received from composition taxpayers, deemed supply
under section 143 and goods sent on approval basis.
▪ HSN wise summary of outward supplies is mandatory in Table No 17

Outward Supplies
Table 4:-
• Details of Outward supplies & Inward Supplies on

which tax is payable
Table 5:-
• Details of Outward supplies on which tax is not

payable
Table 10&11:-
• Supplies/tax declared/reduced through Amendments
GSTR 9 Note: Reconciliation of GSTR1, GSTR 3B and books is

important before filling of information in above tables.

Walkthrough of GSTR9 outward supplies
❖ GSTR 9 requires verification by the taxpayers. But no requirement to obtain certification from auditors.
❖ Additional tax can be paid along with this form through Form DRC-03.
❖ Information of Apr 18 to Mar 19 to be reported in this form, except Part V where details of April 19 to Sep 2019 are submitted.
FORM GSTR-9
(See rule 80)
Annual Return
Pt. I Basic Details
1 Financial Year
2 GSTIN
3A Legal Name
3B Trade Name (if any)
Pt. II Details of Outward and inward supplies made during the financial year*
(Amount in ₹ in all tables)
Nature of Supplies Taxable Value CGST SGST IGST Cess
1 2 3 4 5 6
4 Details of advances, inward and outward supplies made duringthe financial year* on which tax is payable
financial year

FORM GSTR 9 : Part II
S. No. HEADING COMMENTS Mandatory/Optional
A Supplies made to un- ▪ Net of Debit / credit note to be reported Mandatory
registered persons (B2C) ▪ Will include details of supply made through e-commerce operators
B ▪ Registered person can either report Debit / credit note separately Mandatory
Supplies made to registered
or can net off the outward supply.
persons (B2B)
▪ Will include details of supply made through e-commerce operators
C Zero rated supply (Export) ▪ Export under LUT is not to be reported here. Mandatory
on payment of tax (except ▪ Registered person can either report Debit / credit note separately or can
supplies to SEZs) net off the outward supply
D Supply to SEZs on payment ▪ Registered person can either report Debit / credit note separately or can Mandatory
of tax net off the outward supply.
E Deemed Exports ▪ Registered person can either report Debit / credit note separately Mandatory
or can net off the outward supply.
F Advances on which tax ▪ Here, case of advance received but invoice not issued during Apr Mandatory
has been paid but invoice 18 to Mar 19 are to be reported
has not been issued (not ▪ Advance on goods was taxable upto 15.11.17 (NN 66/2017 CT)
covered under (A) to (E)
above)

FORM GSTR 9 : Part II
COMMENT Mandatory/ Optional
S. No. HEADING
▪ As Recipient - Cases where Sec 9(3), 9(4) is applicable to be Mandatory

Inward supplies on which tax is to be paid reported.(It doesn’t include Import of Goods).
G
on reverse charge basis ▪ Including Advances,
▪ Net of Debit / credit note to be reported
H Sub-total (A to G above)
Credit Notes issued in respect of ▪ Registered person shall have an option to fill Table 4B to Optional
I transactions specified in (B) to (E) above (-) Table 4E net of credit notes.
Debit Notes issued in respect of transactions ▪ Registered person shall have an option to fill Table 4B to Optional
J specified in (B) to (E) above (+) Table 4E net of credit notes
▪ Details of amendment made to above Para 4B, Para 4C, Para Optional
Supplies / tax declared through 4D, Para 4E, Para 4I, Para 4J to be reported here.
K
Amendments (+) ▪ Registered person shall have an option to fill Table 4B to
Table 4E net of amendments
▪ Details of amendment made to above Para 4B, Para 4C, Optional
Supplies / tax reduced through Para 4D, Para 4E, Para 4I, Para 4J to be reported here.
L
Amendments (-) ▪ Registered person shall have an option to fill Table 4B to
Table 4E net of amendments
S. No. HEADING
M Sub-total (I to L above) Will be transferred in GSTR 9C to
N Supplies and advances on which tax is to be paid (H + M) above match with Financial Turnover
5 Details of Outward supplies on which COMMENT Mandatory/ Optional

tax is not payable
A Zero rated supply (Export) ▪ Export under LUT is to be reported here. Mandatory
without payment of tax
B Supply to SEZs without payment of tax ▪ Supplies under LUT is to be reported here. Mandatory
C ▪ As Supplier - Cases where Sec 9(3), 9(4) is applicable to Mandatory
Supplies on which tax is to be paid be reported.
by the recipient on reverse charge basis ▪ Registered person can either report Debit / credit note
separately or can net off the outward supply.
D ▪ The registered person shall have an option to either Mandatory
separately report his supplies as exempted, nil rated
Exempted
and Non-GST supply or report consolidated information
for all these three heads in the exempted row only
E Nil Rated Optional
F Non-GST supply (Includes “No Supply”)* ▪ "No Supply" category is also be covered here. Optional

S. No. HEADING COMMENT Mandatory/ Optional
G Sub-total (A to F above)
H Credit Notes issued in respect of transactions ▪ The registered person shall have an option to fill Optional
specified in A to F above (-) Table 5A to 5F net of credit/debit notes
Debit Notes issued in respect of transactions
I specified in A to F above (+)
J Supplies declared through Amendments (+) ▪ The registered person shall have an option to fill Optional
K Supplies reduced through Amendments (-) Table 5A to Table 5F net of amendments
L Sub-Total (H to K above)
M Turnover on which tax is not to be paid (G + L
above)
N ▪ This will include advances on which tax is paid
Total Turnover (including advances) (4N + 5M -
but invoice is not issued during the year
4G above)
(Unadjusted Advances).
Pt. IV Details of tax paid as declared in returns filed during the financial year
Tax Paid through ITC
Description Paid through cash
9 Payable Central Tax State Tax/UT Tax Integrated Tax Cess
1 2 3 4 5 6 7
Integrated Tax - - - - -
Central Tax - - - -
State/UT Tax - - - -
Cess/Interest/Late
- -
fee/Penalty/Other

Part V Particulars of the transactions for the FY 21-22 declared in returns between April 2022 till October 2022
10 Supplies / tax declared through Amendment done in April 2022 to Oct 22 Mandatory
Amendments (+) (net of debit GSTR 1/Debit or Credit notes issued w.r.t
notes) supplies declared in GSTR 1 of April 2021
11 Supplies / tax reduced through to Mar 22, should be reported here.
Amendments (-) (net of credit notes)
14 Differential tax paid on account of declaration in 10 & 11 above

Description Payable Paid
1 2 3
Integrated Tax -
Central Tax -
State/UT Tax -
Cess
Interest

Reconciliation statement – GSTR 9C
Total 5 Total 16
Parts Reporting
Parts heads
Part I Part II Part III Part IV Part V
Turnover Reconciliation Input Tax Credit Auditor’s

Basic Details
Reconciliation of Tax paid Reconciliation Recommendation

Walkthrough of GSTR9C outward supplies
FORM GSTR 9C : Table 5 : Reconciliation of Turnover
S.No. HEADING COMMENT Mandatory/ Optional
A Turnover (including exports) as per audited ▪ In case of multiple GST registration, entities will have to Mandatory
financial statements for the State / UT (For internally derive their GSTIN wise turnover and declare the
multi-GSTIN units under same PAN the same here.
turnover shall be derived from the audited ▪ This shall include export turnover, if any
Annual Financial Statement)
B ▪ When GST is payable during the FY on such revenue (which Optional
was recognized earlier), the value of such revenue shall be
Unbilled revenue at the beginning of Financial declared here.
Year (+) ▪ The registered person shall have an option to not fill this
table. If there are any adjustments required to be reported
then the same may be reported in Table 5O.
C ▪ Value of all advances for which GST has been paid but the Optional
Unadjusted advances at the end of the same has not been recognized as revenue in the audited
Financial Year (+) Annual Financial Statement shall be declared here
▪ Consolidated details can be reported in Table 5O as well.
D ▪ Any deemed supply which is already part of the turnover Optional
in the audited Annual Financial Statement is not required
Deemed Supply under Schedule I (+)
to be included here
E ▪ Credit notes which were issued after 31st of March for any Optional
Credit Notes issued after the end of the supply accounted in the current financial year but such credit
financial year but reflected in the annual notes were reflected in the annual return (GSTR-9) shall be
return (-) declared here.
F Trade Discounts accounted for in the ▪ Trade Discount on which GST was leviable (being not Optional
audited Annual Financial Statement but are permissible) shall be declared here.
not permissible under GST (+) ▪ Consolidated details can be reported in Table 5O as well.
G Turnover from April 2017 to June 2017 (-) ▪ Consolidated details can be reported in Table 5O as well. Optional
H ▪ Unbilled revenue which was recorded in the books of Optional
accounts on the basis of accrual system of accounting during
Unbilled revenue at the end of
the FY but GST was not payable on such revenue in the same
Financial Year (-)
financial year shall be declared here.
I ▪ Value of all advances for which GST has not been paid but Optional
Unadjusted Advances at the the same has been recognized as revenue in the audited
beginning of the Financial Year (-) Annual Financial Statement shall be declared here.
J ▪ Credit notes which were issued after 31st of March for any Optional
Credit Notes issued after the end of the supply accounted in the current financial year but such credit
financial year but reflected in the annual notes were reflected in the annual return (GSTR-9) shall be
return (+) declared here.
K ▪ Supply for which the DTA units have filed BOE shall be declared Optional
Adjustments on account of supply of
here
goods by SEZ units to DTA Units (-)
L ▪ For suppliers who opted out of composition scheme during the Optional
Turnover for the period under
current FY
composition scheme (-)
M ▪ Any difference between the turnover reported in the Annual Optional
Adjustments in turnover under Return (GSTR 9) and turnover reported in the audited Annual
section 15 and rules thereunder Financial Statement due to difference in valuation of supplies
(+/-) shall be declared here.
N Adjustments in turnover due to ▪ Consolidated details can be reported in Table 5O as well. Optional
foreign exchange fluctuations.(+/-)

O Adjustments in turnover ▪ Consolidated details of Table 5B to 5N can be Mandatory
due to reasons not listed reported in Table 5O as well.
above (+/-)
P Annual turnover after ▪ This field shall be auto-populated
adjustments as above
Q Turnover as declared in Mandatory
Annual Return (GSTR 9)
R Un-Reconciled
turnover (Q - P)

Other Illustrations where dispute may arise
Instance Books Return
Transactions appearing in Both but any other difference arises like
- Rate of outward liability Taken 5% instead of 18% a a
- Valuation issue
Ind AS Adjustment a r
Stock transfer between branches r a
Deemed supply transactions r a
Supplies between related parties r r

FORM GSTR 9C : Table 7: Reconciliation of Taxable Turnover
S.No. COMMENT Mandatory/
HEADING
Optional
A Annual turnover after adjustments ▪ Auto Populated
(from 5P above)
B Value of Exempted, Nil Rated, Non-GST ▪ Net of credit notes, debit notes and amendments, if any Mandatory
supplies, No-Supply turnover
C Zero rated supplies without payment ▪ Net of credit notes, debit notes and amendments, if any Mandatory
of tax
D Supplies on which tax is to be ▪ Net of credit notes, debit notes and amendments, if any Mandatory
paid by the recipient on reverse
charge basis
E Taxable turnover as per ▪ Auto Populated
adjustments above (A-B-C-D)
F Taxable turnover as per liability Mandatory
declared in Annual Return
(GSTR9)
G Unreconciled taxable turnover
(F-E)

FORM GSTR 9C : Table 9: Reconciliation of Tax Paid

Case Studies – Outward
Supply
Case Study 1
Case study 1
Turnover in F.Y 21-22
120.00
100.00
80.00
GSTR 1 Books (Correct Figure) GSTR 3B
Table 9 (Rs. 80)
How to resolve this

Impact on GSTR 9 difference of
Table 4 Rs.40?
(Rs. 120)

Case Study 1
Case study 1
Impact on GSTR 9
Pt. II Details of Outward and inward supplies made during the financial year
Nature of Supplies
Taxable Value Central Tax State Tax / UT Tax Integrated Tax Cess
1 2 3 4 5 6
4 Details of advances, inward and outward supplies made during the financial year on which tax is payable
Supplies made to un-registered persons
A 10.80 10.80 -
(B2C) 120 -
B Supplies made to registered persons (B2B) - - - -
-
9 Description Tax Paid through cash Paid through ITC
Payable Central Tax State Tax/UT Tax Integrated Tax Cess
1 2 3 4 5 6 7
Integrated 0 0 - - -
Tax
Central Tax 10.80 7.20 - -
State/UT Tax 10.80 7.20 - -

Case Study 2
Case study 2
100.00 100.00
80.00
Rest 20
reported in 3B
GSTR 1 Books (Correct Figure) GSTR 3B of 22-23
Table 9 (Rs. 80)
Impact on GSTR 9 How to resolve this

Table 4 difference of Rs. 20
(Rs. 80)

Case Study 2
Case study 2
Impact on GSTR 9
Nature of Supplies
1 2 3 4 5 6
A 7.20 7.20 -
(B2C) 80 -
-
1 2 3 4 5 6 7
Central Tax 7.20 7.20 - -
State/UT Tax 7.20 7.20 - -
Pt. VParticulars of the transactions for the FY 2021-22 declared in returns between April 2022 till October 2022
cription Taxable Central State Tax/UT Integrated Cess
Value Tax Tax Tax
1 2 3 4 5 6
10 Supplies / tax declared through Amendments (+) (net of debit
20 1.80 1.80
notes)

Case Study3
Case study 3
100.00 100.00
80.00
Rest 20
reported in 3B
of 21-22
Treatment of Rs. 20 in GSTR 9 of 21-22
Option 1 Option 2
Add in table 4 Don’t add in table 4
Continued…….
Case Study 3
Case study 3
Continued……. Treatment of Rs. 20 in GSTR 9 of 21-22 which
pertains to 20-21 but shown in GSTR 3B of 21-22
Option 1 Option 2
Add in table 4 Don’t add in table 4
Impact on Table 4 and 9 will Table 4 and 9 will

GSTR 9 match not match
Impact on Difference in 9C
No difference
GSTR 9C will come

Impact of F.Y. 20-21 transaction in F.Y. 21-22
Transaction of F.Y. 20-21 which were declared in the monthly returns of 21-22 and were disclosed in the
following tables of GSTR 9 of 20-21
Particulars of the transactions for the FY 2020-21 declared in returns between April 2022 till October
Pt. V
2022
State
Taxable Central Integrate
Description Tax/UT Cess
Value Tax d Tax
Tax
1 2 3 4 5 6
Supplies / tax declared through Amendments (+)
10
(net of debit notes)
Supplies / tax reduced through Amendments (-)
11
(net of credit notes)
Reversal of ITC availed during previous financial
12
year - - -
13 ITC availed for the previous financial year
Treatment in 9/9C
Option 1 Option 2
Reduce the impact of these Keep the figures as such in GSTR
transaction from table4/6 of 9 and difference in GSTR 9C will
GSTR 9 and disclose the reasons arise for these transaction.
of differences in GSTR 9 along Disclose the reasons of those
with proper backup. transaction along with proper
backup
Option 1
Nature of Supplies
1 2 3 4 5 6
A 20 1.80 1.80 - -
(B2C)
1 2 3 4 5 6 7
Central Tax 1.80 1.80 - -
State/UT Tax 1.80 1.80 - -

Option 2
Nature of Supplies
1 2 3 4 5 6
A 0 0 0 - -
(B2C)
1 2 3 4 5 6 7
Central Tax 0 1.80 - -
State/UT Tax 0 1.80 - -

Case Study 4
Case study 4
Issue: Assesse paid CGST and SGST during the year 21-22 and later on during the audit it was found that IGST was
payable
Wrongly Paid CGST + SGST (100+100)
Correct IGST (200)
Impact on Difference in table 4 and 9. Excess payment of CGST and

GSTR 9 SGST will appear and IGST will appear as payable
Pay IGST amount through

DRC-03 and claim refund of
CGST and SGST
Case Study 4
Case study 4 Impact on GSTR 9
Nature of Supplies
1 2 3 4 5 6
A 0 0 200 -
(B2C)
B Supplies made to registered persons (B2B) - - - - -
1 2 3 4 5 6 7
Integrated 200 0
Tax
Central Tax 0 100 - - -
State/UT Tax 0 100 - - - -

Case Study 5
Case study 5 Impact of Exempt supplies on ITC
Exempt supplies
Renting of
Interest Dividend Sale of residential
Income Income Electricity dwelling
Etc.
Rule 42/43 requires reversal of Whether presence of exempt

common credit attributable to supplies in financials and not
exempt supplies declared in monthly returns
can impact GSTR 9?

Case Study 6
Case study 6
120.00
100.00 100.00
Table 4 (Rs.
100)
Impact on GSTR 9
Refund of taxes on Rs.
Table 9 20?
(Rs. 120)

Case Study 6
Nature of Supplies
1 2 3 4 5 6
A 100 9 9 - -
(B2C)
B Supplies made to registered persons (B2B) - - - - -
1 2 3 4 5 6 7
Integrated 0 0
Tax
Central Tax 9 10.80 - - -
State/UT Tax 9 10.80 - - - -

Case Study 7
Case study 7
In the F.Y 20-21

B2B supply of Rs. 100 wrongly
disclosed in monthly returns as B2C
In the F.Y. 21-22 - Corrected from

B2B to B2C
Impact on GSTR9 or GSTR 9C?

Case Study 8
Case study 8 Impact of Supplies not forming part of Financials on GSTR 9/9C
Examples of supplies which Common management Common infrastructure

do not form part of etc.
financials but are taxable
supplies as per GST act
After sales services by

branches
Use of common trademark

INWARD SUPPLY
Walkthrough of GSTR9 inward supplies
FORM GSTR 9 : FY 21-22: Part III
✓ In Part III, only tax amount is required to be mentioned. Value of supplies is not required to be mentioned.
✓ In this part, at some para’s, bifurcation of information is required to be given
o Between Inputs, Capital Goods and Input Services at Sr. No. 6B to 6D (For F.Y 21-22, instead of showing bifurcation, consolidated details
can be shown in inputs row only) and
o Between Inputs and Capital Goods at Sr. No. 6E
Pt. III Details of ITC as declared for the financial year*
Description Type CGST SGST IGST Cess
1 2 3 4 5 6
6 Details of ITC availed during the financialyear*
A Total amount of input tax credit availed through FORM
<Auto> <Auto> <Auto> <Auto>
GSTR-3B (sum total of Table 4A of FORM GSTR-3B)
B Inward supplies (other than imports Inputs ▪ Capital goods credit to be shown. Remaining ITC can be
and inward supplies liable to Capital Goods shown under the head inputs, instead of bifurcating the
reverse charge but includes services same.
received from SEZs) ▪ Credit availed, but reversed and then re-claimed shall
Input Services not be reported here. It is to be reported in below Para
6(H) © Tattvam Advisors, All rights reserved 107
COMMENT Mandatory/ Optional
C Inward supplies received from ▪ Credit of tax paid as per Sec 9(4) is to be Optional
unregistered persons liable to reverse considered here
charge (other than B above) on which tax ▪ It doesn’t include import of service
is paid & ITC availed ▪ Consolidated details of Table 6C and 6D
can be shown in Table 6D.
D Inward supplies received from registered ▪ Credit of tax paid as per Sec 9(3) is to be Mandatory
persons liable to reverse charge (other considered here
than B above) on which tax is paid and ITC
availed
E Import of goods (including supplies from ▪ Consolidated details can be shown in Mandatory
SEZs) inputs row only
F Import of services (excluding inward Mandatory
supplies from SEZs)
G Input Tax credit received from ISD Mandatory

Amount of ITC reclaimed (other than B ▪ Amount of ITC claimed, reversed and reclaimed is
H Mandatory
above) under the provisions of the Act to be reported here
I Sub-total (B to H above)
▪ Ideally, this amount should be Zero. Figures as
J
Difference (I - A above) per para 6B to 6H are just detailed versions of
amount mentioned in Para 6A above
Transition Credit through TRAN-I (including ▪ Includes amount revised in Trans 1
K Mandatory
revisions if any)
L Transition Credit through TRAN-II Mandatory
Any other ITC availed but not specified ▪ For example : Details of ITC availed through ITC
M Mandatory
above 01, ITC 02 to be reported here
N Sub-total (K to M above)
O Total ITC availed (I + N above)
Details of ITC Reversed and Ineligible ITC
7 for the financial year*
As per Rule 37 ▪ Case of payment not made within 180 days Optional
A

▪ Reversal of excess ITC distributed credit by ISD as Optional
B As per Rule 39
per Rule 39(1)(j), 39(2)
▪ Reversal of ITC of Input/Input Services, if used for Optional
C As per Rule 42
exempted supply
▪ Reversal of ITC of Capital Goods, if used for Optional
D As per Rule 43
exempted supply
E ▪ If value of Table 4D was not included in 4A, then Optional
As per section 17(5)
no entry to be made.
F Reversal of TRAN-I credit Mandatory
G Reversal of TRAN-II credit Mandatory
▪ ITC reversed through ITC 03, Sale of CG, Reversal Mandatory
H
due to closure of business or any other reversal
may be reported here
Other reversals (pl. specify) ▪ Registered person shall have an option to either
fill information on reversal separately in Table 7A
to 7E or report the entire amount of reversal
under Table 7H only. Will be transferred in GSTR 9C to
I Total ITC Reversed (A to H above) match with ITC availed in books of
J Net ITC Available for Utilization (6O - 7I) accounts (Table 12)

S. no HEADING COMMENT Mandatory/ Optional
8 Other ITC related information
A ▪ This will be auto populated by system from GSTR 2A. Optional
ITC as per GSTR-2A (Table 3 & 5 thereof) ▪ Registered person shall have an option to upload details for the
entries in Table 8A to 8D duly signed in PDF Format in Form GSTR 9C
▪ It will be auto populated. (In form notified by govt, auto
B ITC as per sum total of 6(B) and 6(H)
comment is mentioned only for CGST, and not for other. It
above
might be typing mistake).
C ITC on inward supplies (other than ▪ Credit pertaining to April 21 to Mar 22, but availed in GSTR 3B of
imports and inward supplies liable to April 22 to Oct 22, shall be declared here.
reverse charge but includes services
received from SEZs) received during
2021-22- but availed during April to
September, 2022
D Difference [A-(B+C)] • The value in row 8D can be negative.
E ITC available but not availed (out of D) • Amount of Para 8E + 8F = 8D
F ITC available but ineligible (out of D)
G IGST paid on import of goods (including
supplies from SEZ)

IGST credit availed on import of ▪ This will be auto populated by system from Table 6E
H
goods (as per 6(E) above) above
I Difference (G-H)
▪ This should be equal to Para 8I above. This
J ITC available but not availed on
is credit not availed and ineligible credit. Mandatory
import of goods (Equal to I)
Unnecessary this extra row is there.
Total ITC to be lapsed in current ▪ This is lapsed credit
K
financial year (E + F + J)
Pt V Particulars of the transactions for the FY 2021-22 declared in returns between April 2022 till October 2022
S.N HEADING COMMENT Mandatory/ Optional
12 Reversal of ITC availed ▪ ITC availed in April 2021 to March 2022 but reversed in returns filed
during previous financial for the months of April 2022 to October 2022 shall be declared here. Optional
year
13 ▪ Goods or services received between April 2021 to March 2022 but
ITC availed for the ITC for the same was availed in returns of April 2022 to October
Optional
previous financial year 2022

Walkthrough of GSTR9C inward supplies
FORM GSTR 9C : FY 21-22: Table 12: Reconciliation of Net ITC
S. COMMENT Mandatory/
HEADING
No. Optional
A ITC availed as per audited Annual ▪ In case of multiple GST registration, entities will have to internally Mandatory
Financial Statement for the State/ UT derive their GSTIN wise ITC and declare the same here.
(For multi-GSTIN units under same
PAN this should be derived from
books of accounts)
B ▪ ITC booked in financial statements in earlier years but claimed in FY Optional
ITC booked in earlier Financial Years
18-19 shall be declared here
claimed in current Financial Year (+)
▪ This shall include transitional credit as well.
C ITC booked in current Financial Year ▪ ITC booked in financial statements in 18-19 but the same has not Optional
to be claimed in subsequent Financial been credited to the ITC ledger for the said FY
Years (-)
D ITC availed as per audited ▪ Auto Populated
financial statements or books of
account
E ITC claimed in Annual Return Mandatory
(GSTR9)
F Un-reconciled ITC

Case Study 1
Case study 1 F.Y. 21-22
Particulars Amount Correct or not

ITC taken in monthly returns 100 r
Correct ITC in Books 90 a
Table 6A –Rs.100
Impact on GSTR 9
Table 6B – Rs. 90
Difference of Rs.10?

Case Study 1
6 Details of ITC availed during the financial year

CGST SGST IGST Cess
Total amount of input tax credit availed through FORM GSTR-3B (sum total of Table 4A of
A - - 100 -
FORM GSTR-3B)
Inputs - - 90 -
Inward supplies (other than imports and inward supplies liable
B Capital Goods - - - -
to reverse charge but includes services received from SEZs)
Input Services - - - -
J Difference -10
Pay through DRC 03

Case Study 2
Case study 2 ITC Figures of 20-21 reported in returns of 21-22

20-21 21-22
Particulars Amount
ITC books 100 ITC of Rs. 100 taken in 3B of 21-22
ITC returns (3B) 0
6A (Auto populate) 100 +

Impact on
S. No. HEADING Amount

GSTR9
ITC availed for 6B 100 +

13 the previous 100
financial year
8A (Auto populate) - Difference

8B 100 + 100?

Case Study 2
Impact on GSTR 9
Case study 2
Option 1 – Show in 6B
CGST SGST IGST Cess
A - - 100 -
FORM GSTR-3B)
Inputs - - 100 -
J Difference - - - -

CGST SGST IGST Cess
A ITC as per GSTR-2A (Table 3 & 5 thereof) 0 0 0 0
B ITC as per sum total of 6(B) and 6(H) above - - 100 -
D Difference - - -100 0

Case Study 2
Impact on GSTR 9
Case study 2
Option 2 – Don’t Show in 6B
CGST SGST IGST Cess
A - - 100 -
FORM GSTR-3B)
Inputs - - 0 -
J Difference - - -100 -

CGST SGST IGST Cess
A ITC as per GSTR-2A (Table 3 & 5 thereof) 0 0 0 0
B ITC as per sum total of 6(B) and 6(H) above - - 0 -
D Difference - - 0 0
Option 2 is Correct option

Case Study - 3
Case study 3 Differences in Table 8A, GSTR 2A/2B and Excel

of 8A
Reasons for differences in GSTR2A Excel Table 8A Form 9 Table 8A
Invoice where POS is different than registered place of recipient a a r

RCM invoices where registered supplier declares those invoices in GSTR 1 a a r
Credit received from ISD a r r
GSTR1 submitted by supplier but not filed a r r
Return submitted after Oct'2019 a r r
Invoice relating to FY 2017-18 a a r
Credit note related to invoice of 18-19 issued in 19-20 a r r
Continued…….
Case Studies on Inward supplies
Case study Differences in Table 8A, GSTR 2A and Excel of 8A

Continued…….
Impact on
Increase in
GSTR 9
difference
in table 8D
Challenges in reconciliation of ITC figures in GSTR 9
Impact of credit
of 20-21 taken
8A and Excel of 8A 8A and 6B 8A figures
8A and 2A difference in 21-22.
difference difference backup?
Reflected in
8A?

Case Study 4
Case study 4 Negative outward supplies due to excess credit notes
Treatment in monthly returns
Adjusted with outward

Increased ITC
supply of next months
No Impact – Correct Excess ITC will appear

Impact on GSTR 9
treatment table 6B
Reduce the ITC manually

If there was no outward
Treatment supplies in subsequent
months then take refund Pay the amount of
of excess credit notes utilized ITC through DRC
-03

Case Study 4
Case study 4 Impact on GSTR 9 – In case ITC was increased
CGST SGST IGST Cess
A - - 20 -
FORM GSTR-3B)
Inputs - - 0 -
J Difference - - -20 -
Don’t show in 6B and pay

difference through DRC-03

Case Study 5
Case study 5 RCM liability of 20-21 paid in 21-22

20-21 21-22
Particulars Amount
RCM liability (books) 100 ITC and liability of Rs. 100 taken
Liability in returns 0 in 3B of 21-22
ITC in returns 0
21-22 Press Release – 3rd

July’2019
Impact on
Credit is 100
GSTR 9
Report in annual return of 18-19

Return and any difference in turnover
Liability should be reported with reasons
(Rs. 100) in reconciliation statement

CONTACT US:-
Thank You
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www.tattvamadvisors.com
[email protected] 12
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Tattvam Chandigarh Branch GST Presentatrion-25th Nov.,2022

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• Interpretational

issues raised by GST

CA Tushar Aggarwal CA Pitam Goel

Tattvam Advisors Copyright@

Type Description Chapter Section- CGST Act Rule

Self Assessment XIII 59 ----

Provisional Assessment XIIII 60 98

Scrutiny of Returns XIIII 61 99

Assessment Assessment of Non-filers of

© Tattvam Advisors, All rights reserved 3

1 01.07.2017 till 08.10.2019

2 09.10.2019 till 31.12.2021

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1. B2B supplies not reported in

2. B2B supplies reported as B2C by

4. Invoice in name of transferor

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This view may be

Tattvam Advisors Copyright@ 13

Section 42(3) – Matching,

The provisions related to matching, The amount in respect of which any

Tattvam Advisors Copyright@ 13

Rule 69 – Matching of ITC Rule 71

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• Bonafide recipient should not be penalized for non-payment of tax by supplier

from supplier to the buyer which is unconstitutional

time of ITC reversal

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© Tattvam Advisors, All rights reserved 12

The Hon’ble High Court held that:

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Tattvam Advisors Copyright@ 14

Existence of a enabling section in the

Union of India The Bombay High Court in case of Nelco

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1. he is in possession of a tax invoice or debit note

Tattvam Advisors Copyright@ 16

Tattvam Advisors Copyright@ 17

ITC to be availed by a registered person to the extent of

Tattvam Advisors Copyright@ 18

As per the above amendment the recipient of supply will be

Tattvam Advisors Copyright@ 19

In Section 16(2), new clause (ba) has been proposed to be

“(ba) the details of input tax credit in respect of the said

Effective from enactment of Finance Bill, 2022

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Implications of amendment in Section 38 of the CGST Act

Tattvam advisors Copyright@ 21

S. No. Restrictions on ITC in GSTR-2B Check mechanism on GST Portal

4. ITC availed by supplier > ITC available in his Clarity awaited

5. Supplier has defaulted in discharging his tax Clarity awaited

Tattvam advisors Copyright@ 22

Buy one get one

© Tattvam Advisors, All rights reserved 24

Section 17(5)(h) Free Samples Gifts

▪ Gift ordinarily means

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