Catch the latest edition of JEST GST by Vijay Kumar Misadventure of a Clandestinely Amended Circular

Misadventure of a clandestinely amended circular

JULY 24, 2019

By Vijay Kumar

THE CBIC has issued a Circular No.109/28/2019-GST, dated 22.07.2019 on Issues related to GST on monthly subscription/contribution charged by a Residential Welfare Association from its members, which was prominently reported by every newspaper worth its GST and analysed by every expert in the tax field. Before I proceed to add my own contribution to the totality of confusion, I should point out the extremely outrageous way in which a glaring blunder in the Circular was corrected.

Please see Clarification No.1 of the Circular as originally issued.

Sl. No.IssueClarification
1.Are the maintenance charges paid by residents to the Resident Welfare Association (RWA) in a housing society exempt from GST and if yes, is there an upper limit on the amount of such charges for the exemption to be available?Supply of service by RWA (unincorporated body or a non- profit entity registered under any law) to its own members by way of reimbursement of charges or share of contribution up to an amount of Rs. 7500 per month per member for providing services and goods for the common use of its members in a housing society or a residential complex are exempt from GST.Prior to 25th January 2018, the exemption was available if the charges or share of contribution did not exceed Rs 5000/- per month per member. The limit was increased to Rs. 7500/- per month per member with effect from 25th January 2018. [Refer clause (c) of Sl. No. 77 to the notification No. 12/2018- Central Tax (Rate) dated 28.06.2019 ]

This was carried by hundreds of publications and widely circulated in the social media. Now, please see the highlighted portion. It mentions clause (c) of Sl. No. 77 to the notification No. 12/2018 – Central Tax (Rate) dated 28.06. 2019. How can Notification No. 12/2018 be dated 28.06.2019? Assuming it can be, there was no Notification No. 12/2018 issued on 28.06.2019. There was of course a Notification No. 12/2018, but that was issued on 29.06.2018. Some Babu in the Board bungled badly. Several websites even gave links to this Notification No. 12/2018, which is in no way related to the issue in hand. Maybe the confusion was because this Notification No. 12/2018 also mentions the amount of Rs. 5000/-. Further, this Notification No. 12/2018 does not have any Sl. No.77, or a clause (c) to it.

Obviously, later somebody in the Board realised this blunder and corrected it, but more obviously they were not ready to admit the blunder and correct it openly, but chose a very surreptitious mode. They redrafted the Circular incorporating the correct Notification and uploaded it on their site without telling anybody. The revised Circular as available in the CBEC website has the relevant portion as:

[Refer clause (c) of Sl. No. 77 to the notification No. 12/2017- Central Tax (Rate) dated 28.06.2017 as amended vide notification No. 2/2018- Central Tax (Rate), dated 25.01.2018 ]

So, it is actually

clause (c) of Sl. No. 77 to the notification No. 12/2017- Central Tax (Rate) dated 28.06.2017 as amended vide notification No. 2/2018- Central Tax (Rate), dated 25.01.2018

as mentioned in the revised Circular and not

clause (c) of Sl. No. 77 to the notification No. 12/2018- Central Tax (Rate) dated 28.06.2019

as mentioned in the original circular.

The Board could have simply issued a corrigendum to correct this mistake, but they did not want to admit the mistake and sought to correct it clandestinely. They would gladly harshly punish an assessee who does this kind of tinkering with his records. Okay, they have corrected their mistake and let us live happily ever after. No, sadly, the story doesn’t end there. Even the uploading of the correction was done clumsily. Now you can find both the Circulars in the Board’s website.

1. The first Circular mentioning the wrong Notification No. 12/2018 –

2. The revised Circular mentioning the correct Notification No. 12/2017 –

While the first Circular is uploaded in many portals including government sites and the website of the GST Council, the second Circular is uploaded only on CBIC website – the rest of the world is perhaps unaware of it and that is precisely what the powers be would like.

Are we supposed to see all the notifications and circulars on an hourly basis and then research to find out if the CBIC has carried out any secret corrections? If this is the way the GST is to be administered, we are in for deep trouble. If there is anything like responsibility, maybe we could ask as to who approved the first circular, who approved the correction and who authorized a revised circular to be uploaded secretly.

God Save Taxpayers (GST)


Taxpayers Can Err; Government Will Not Forgive, Court Will: An assessee filled and filed online the GST TRAN-1 Form on 27th December, 2017. It committed an inadvertent error in showing the available stock of goods as on 30th June, 2017 in column 7(d) of the Form instead of column 7(a) of the Form. As a result of this error, it has been unable to avail of the Central GST Credit. After the due date for filing of the TRAN-1 Form was crossed, the system got locked down at the portal and no tax payer was able to view/amend their TRAN-1 forms. The portal opened up on 15th March, 2018 for filing the TRAN-2 Returns. It was at that stage the assessee realised that it had committed an inadvertent error in the TRAN-1 Form. The system, however, did not permit it to revise the TRAN-1 Form.

On 23rd April, 2018, the assesee addressed a representation to Officer, Single Point of Contact (SPOC) Delhi, GST-ITO, admitting to having committed the abovementioned inadvertent error and seeking permission to rectify the mistake. The credit amount involved was Rs.20,34,807/-. It was pointed out that on account of inability to avail of the above credit amount, the assessee was not in a position to file the GSTR-3B returns. On the said representation, the GSTO stated that it will be forwarded to the GST Council for further action. However, nothing happened. The assessee addressed further letters on 19th September, 2018 to SPOC and 24th September, 2018 to the Commissioner, Delhi GST, but was not permitted to rectify the TRAN-1 Form already filed online. An e-mail was addressed to the GSTN Nodal Officer on 22nd October, 2018 explaining the difficulty. After several reminders bore no results, the assessee approached the Delhi High Court in writ petition.

The High Court noted that there were earlier cases where the High Courts permitted rectification of the error observing, “The GST System is still in a ‘trial and error phase’ as far as its implementation is concerned”.

The Court also noted with concern that the representations repeatedly made by the Petitioner were not attended to by the Revenue which resulted in the Petitioner having to approach the Court for relief.

The apprehension of the Revenue was that allowing rectification can open the ‘flood gates’, but the High Court observed that it can easily be allayed by the Revenue themselves if they provide a robust Grievance Redressal Mechanism that can address such genuine grievances of the traders instead of compelling every trader to approach the Court for relief.

So, the Court directed the Revenue to either open the online portal so as to enable the Petitioner to again file the rectified TRAN-I Form electronically or accept the manually filed TRAN-I Form with the correction on or before 31st July, 2019. The Petitioner will correspondingly be permitted to thereafter file the return in TRAN-2. The penalty and interest for the late filing of GSTR-3B will be waived off in view of the above directions, subject, of course, to the Petitioner being permitted to and in fact filing the rectified TRAN-1 Form as directed. (2019-TIOL-1564-HC-DEL-GST)

Dispute Resolution is an avowed goal of the department, but to resolve a dispute, there has to be a dispute in the first place. So, the government sows the seeds of dispute and watches merrily as it grows and clogs the justice system, especially the High Courts and finally would come out with a Sabka Vishwas Scheme. Do you need a High Court to tell you that if I make a mistake, I should have a reasonable opportunity to correct it? After all, the government is doing it all the time. If I make a mistake, I will be punished; if the Government makes a mistake, I will be punished. Fair enough?


A Member asked a question in the Rajya Sabha:

Will the Minister of FINANCE be pleased to state :-

(a)  whether Government is aware that there has been a significant rise in tax litigation cases in the recent past mainly on account of Government persisting with litigation despite high rates of failure at every stage of the appellate process;

(b)  whether Government would make effective framework in the income-tax law in this regard which would help in preventing and resolving tax issues; and

(c)  if so, the details thereof and if not, the reasons therefor?

The Minister of State answered yesterday

(a): There is no significant rise in indirect and direct tax litigation in the recent past on account of Government persisting with litigation.

In respect of Central Board of Indirect Taxes & Customs (CBIC), the total pendency of appeals at Supreme Court, High Court and CESTAT as on 30.06.2017 was 2,73,591 whereas the same has significantly come down to 1,05,756 as on 31.03.2019, which is to the tune of 61% reduction. Details of the same are as under:

ForumAppeals Pending as on 30.06.2017Appeals Pending as on 31.03.2019
Supreme Court58123109
High Court27,57015,626


A Lok Sabha Member asked the Finance Minister:

Will the Minister of FINANCE be pleased to state:-

(a)  Whether the Government has taken steps to resolve the disputes related to Goods and Services Tax (GST) and if so, the details thereof;

(b)  whether the Government has taken a decision to form appellate tribunal in the States in this regard;

The Finance Minister replied,

(a)  Section 109 of the CGST Act, 2017 empowers the Central Government to constitute, on the recommendation of Council, by notification, with effect from such date as may be specified therein, an Appellate Tribunal known as the Goods and Services Tax Appellate Tribunal (GSTAT) for hearing appeals against the orders passed by the Appellate Authority or the Revisional Authority.

Accordingly, a notification to constitute the National Bench of GSTAT at New Delhi has been issued in this regard.

(b)  The sub section 6 of section 109 of the CGST Act, 2017 provides that the Government shall, by notification, specify for each state or Union Territory, a bench of the Appellate Tribunal for exercising the powers of the Appellate Tribunal within the concerned State or Union Territory on receipt of the request from any State and on the recommendations of the Council. The GST Council in its 35th meeting has agreed to recommend for the creation of the State Benches and Area Benches of the GSTAT in 24 States and 07 Union Territories.


A Cartoon doing the rounds in social media depicts a tax consultant congratulating the scientist for uploading Chandrayaan-2 successfully, but asks him, “try uploading a GST return”