GST UPDATE

QR Code on B2C invoices

Introduction

The Central Board of Indirect Taxes & Customs (“CBIC”) vide Notification No. 14/2020-Central Tax, amended by Notification No. 71/2020-Central Tax, mandated that the registered persons with an annual turnover of more than Rs.500 crore in any preceding FY (from 2017-18) are required to display Quick Response Code (“QR Code”) on their B2C invoices compulsorily from December 1 2020. Further, vide Notification No. 89/2020- Central Tax; dated November 29 2020, the penalty has been waived off for non-compliance with Notification No. 14/2020-Central Tax for the period from 1.12.2020, to 31.03.2021, subjected to the condition that said person complies with the said Notification from April 1, 2021.

What is QR Code?

It is a two-dimensional barcode applied to presenting information in its machine-readable format and can be scanned from any mobile device.  It is editable and allows additional features such as scan analytics, password protection, device-based redirection, and access management. The purpose is to facilitate digital payments.

Recent Amendment

The CBIC has issued a Circular No.  146/02/2021-GST dated February 23, 2021, clarifying the applicability of the dynamic QR Code on B2C invoices and the compliance of Notification No. 14/2020- Central Tax dated March 21, 2020.

Highlights

• As regards the exports, though a registered person makes such supplies to an unregistered person, however, as the e-invoices are required to be issued in respect of supplies for exports, treating them as Business to Business (B2B) supplies as per Notification No. 13/2020-Central Tax, dated March 21, 2020. Therefore, the QR code does not apply to such Export invoices.

• The dynamic QR Code contains the below-stated information: -

1. Supplier GSTIN number and his UPI ID
2. Payee’s Bank A/C number and IFSC
3. Invoice number & invoice date,
4. Total Invoice Value and
5. GST amount along with CGST, SGST, IGST, CESS, etc.

Further, the QR Code should be such that it can be scanned to make a digital payment.

Digital Display of QR code

In case, the supplier has digitally displayed the QR Code, and the customer pays for it the invoice: -

1. Using any mode such as UPI, credit/ debit card/ online banking/ cash or the combination of various modes of payment available these days, with or without using the dynamic QR Code. The supplier provides a cross-reference of such payment (that is transaction id along with date, time, amount of payment, and the mode of payment opted such as UPI, online banking, debit card, credit card, etc.) on the invoice; or
2. Pays in the form of cash, without using the dynamic QR Code and simultaneously, the supplier provides a cross-reference of amount paid in cash, along with date of said payment on the invoice;

The invoice shall be deemed to be in compliance with the requirement of having a dynamic QR Code.
 

• Other than the pre-paid supply, i.e. where payment is made after generation /issuance of invoice- The supplier will provide the dynamic QR Code as required on the invoice.

 

• Pre-paid supply – A cross-reference of the payment received, that is, either through the online e-mode or in cash or a combination of these, is made on the invoice. Thereafter the invoice would be deemed to have complied with the requirement of dynamic QR Code.

 

• The above provisions are equally applicable to the suppliers making supplies on the E-commerce platforms.

The Central Board of Indirect Taxes & Customs (CBIC) has issued a Circular No. CBEC-20/16/05/2021-GST/359 dated February 23, 2021, prescribing guidelines u/s 83 of Central Goods and Services Tax Act, 2017 (CGST Act) on provisional attachment of property

Key Highlights

Grounds for provisional attachment of property

• The Commissioner must exercise his due diligence and carefully consider and examine the case's facts, including the nature of committed offence, nature of the business, the amount involved, and the extent of investment in capital assets before attaching the concerned property.
• The Commissioner must have sufficient reasons to believe that the taxable person may dispose of or remove the property, if it is not attached provisionally. 
• The basis on which the Commissioner has formed such an opinion should be recorded appropriately in the file. 
• The power of the provisional attachment u/s 83 of the CGST Act should not be exercised in a routine/mechanical manner. There must be a careful examination of the facts of the case.

Eligible cases for provisional attachment of property

The provisional attachment of property should not be invoked in cases of any technical nature. It should be reported mainly when there is an evasion of tax or where the ITC has been availed/utilized wrongly or wrongfully passed on.
 
The below-mentioned are a few cases, where the provisional attachment of property can be resorted, subjected to specific facts of the matter: -

1. Where a taxable person has supplied any goods/services without issuing any invoice, with an intention to evade the tax, or 
2. Where a taxable person has issued any invoice without supply; or 
3. Where a taxable person has availed ITC using the invoice or bill referred to in clause (b) or fraudulently availed ITC without any invoice; or 
4. Where a taxable person has collected any amount as tax but has failed to pay the same tax to the Govt beyond three months; or 
5. Where a taxable person has fraudulently obtained a refund; or 
6. Where a taxable person has passed on ITC fraudulently to the recipients but has not paid the proportional tax. 

Investigation & Adjudication

As the provisional attachment of property is resorted to protecting revenue's interests and may affect the working capital of taxable person, it may have endeavoured that in all such cases, the investigation and adjudication are completed at the earliest. 

Types of property for provisional attachment

• It should be ensured that value of the property attached provisionally is not excessive.
• It should be near the estimated amount of pending revenue. 
• More than one property can be attached. 
• The provisional attachment can be made of property belonging to the taxable person only, against whom the proceedings u/s 83 of the CGST Act are pending. 
• The movable property should generally be attached only if the immovable property, available for the attachment, is insufficient to protect revenue interests. 
• As far as possible, it is crucial to ensure that such attachment does not hamper the taxable person's normal business activities. This would mean that the Department should not usually attach raw materials and inputs required to produce finished goods. 
• In cases, where movable property, including a bank account, belonging to a taxable person has been atached, such movable property may be released if a taxable person offers, in lieu of movable property, any other immovable property, which is also sufficient to protect the interest of revenue.

In conclusion, the recent Supreme Court judgment in the case of Canon India has created uncertainty regarding the power of the Directorate of Revenue Intelligence (DRI) to issue Show Cause Notices under the Customs Act. The CBIC has directed the pending SCNs issued by the DRI to be kept on hold until further notice. While the judgment has a significant impact on the trade and industry, its merit is debatable as the Delhi High Court had previously held that DRI officers were authorized to initiate proceedings under the Customs Act. The interpretation of this judgment by the CBIC remains to be seen.

Stay updated on the latest developments regarding SCNs issued by DRI and the Supreme Court's judgment. Follow our blog for insights and analysis on the impact of these decisions on the Trade and Industry. For more Info, connect with us at: info@manishanilgupta.com

Disclaimer:The information provided in this blog is for general purposes only and should not be considered as professional advice