CBIC vide Notification No. 94/2020 – Central Tax dated 22^nd December, 2020 has notified CGST (Fourteenth Amendment) Rules, 2020 to amend the CGST rules. A gist of the amendments carried out has been described below :

• Biometric Based Aadhaar Authentication for GST Registration

This provision is introduced by substituting sub-rule (4A) of Rule 8, but it shall be applicable with effect from a date to be notified. The GST registration process is envisaged as follows :

Every application for new registration shall be followed by

1. biometric-based Aadhaar authentication and taking photograph of the applicant, if he has opted for authentication of Aadhaar number; or
2. taking biometric information, photograph and verification of such other KYC documents, as notified, if he has opted not to get Aadhaar authentication done,

Above procedure is not required in case of persons exempted under Sec 25(6D).

Verification of the original copy of the documents uploaded with the application in FORM GST REG-01 is also mandated. The application shall be deemed to be complete only after completion of the process laid down under this subrule.

 

• Time Limit for Granting GST Registration Increased

The time limit for granting registration by the department has been increased from 3 to 7 working days. Further, the proviso to Rule 9(1) has also been amended to include that physical verification of the place of business shall be mandatory where:

a person, other than a person notified under sub-section (6D) of section 25, fails to undergo authentication of Aadhaar number or does not opt for authentication of Aadhaar number; or

the proper officer, with the approval of an officer authorised by the Commissioner not below the rank of Assistant Commissioner, deems it fit to carry out physical verification of places of business.

Furthermore, the registration shall be granted within 30 days of submission of application instead of the earlier period of 21 days in physical verification cases.

• Suo-Moto Cancellation of Registration for Specified Violations

Rule 21 has been amended to include the specified violations for Suo-moto cancellation of registration:

• avails input tax credit in violation of the provisions of section 16 of the Act or the rules made thereunder; or
• furnishes the details of outward supplies in FORM GSTR-1 under section 37 for one or more tax periods which is in excess of the outward supplies declared by him in his valid return under section 39 for the said tax periods; or
• violates the provision of rule 86B (discussed in later part)

• Suspension of Registration in case of Differences in GSTR-3B & GSTR-1

Sub-rule (2A) has been inserted in Rule 21A, whereby if a comparison of returns furnished by a registered person under Sec 39 with

1. the details of outward supplies furnished in FORM GSTR-1 or
2. the details of inward supplies derived based on the details of outward supplies furnished by his suppliers in their FORM GSTR-1,

or such other analysis carried out on the recommendations of the Council show that there are significant differences or anomalies indicating contravention of the provisions of the Act or the rules, his registration shall be suspended and the said person shall be intimated in FORM GST REG-31, electronically.

Furthermore, sub-rule (3A) to Rule 21A has also been inserted to provide that a registered person whose registration has been suspended shall not be granted any refund under Sec 54 during the period of suspension.

Moreover, such person would also not be allowed to furnish information in PART A of E-way Bill.

 

• Reduced ITC Entitlement Under Rule 36(4) From 10% to 5% w.e.f. 1^st January, 2021

With effect from 1^st January, 2021, Rule 36(4) shall be substituted to further reduce the margin from 10% to 5% of the eligible credit available in respect of invoices or debit notes the details of which have been furnished by the suppliers in FORM GSTR-1 or using the Invoice Furnishing Facility (IFF).

 

• Blocking of GSTR-1 for Non-Filing of GSTR-3B

New sub-rule (5) to Rule 59 has been inserted to provide as follows:

1. a registered person shall not be allowed to furnish FORM GSTR-1, if he has not furnished the return in FORM GSTR-3B for preceding 2 months;
2. a registered person required to file GSTR-3B quarterly shall not be allowed to furnish details of outward supplies in FORM GSTR-1 or using IFF, if he has not furnished the return in FORM GSTR-3B for preceding tax period;
3. a registered person to whom restriction under Rule 86B applies, shall not be allowed to furnish details of outward supplies in FORM GSTR-1 or using IFF if he has not furnished the return in FORM GSTR-3B for preceding tax period.

 

• Restrictions on Use of Amount Available in E-Credit Ledger

With effect from 1^st January, 2021, a new Rule 86B shall be effective to provide that the registered person shall not use the amount available in E-credit ledger to discharge his liability towards output tax in excess of 99% of such tax liability, in cases where the value of taxable supply other than exempt supply and zero-rated supply, in a month exceeds 50 lakh rupees.

Above restriction shall not apply in following cases :

1. the person has paid more than 1 lakh rupees as income tax in each of the last 2 F.Y. for which the time limit to file return of income under sub-section (1) of section 139 of the Income Tax Act has expired;
2. the registered person has received a refund amount of more than 1 lakh rupees in the preceding financial year on account of unutilised input tax credit under Sec 54(3) for zero-rated supplies or inverted duty structure;
3. the registered person has discharged his liability towards output tax through the electronic cash ledger for an amount which is in excess of 1% of the total output tax liability, applied cumulatively, up-to the said month in the current financial year;
4. the registered person is Govt Department, PSU, local authority or a statutory body.

 

• Validity of E-way bill Reduced

Amendment has been carried out in Rule 138(10) w.e.f. 1^st January, 2021, according to which the e-way bill will now be valid for 1 day for every 200 km of travel, as against 100 km earlier. Also, for every 200 km or part thereof thereafter, one additional day will be allowed.