For Private Circulation onlyemail : visakhapatnam@icai.org website : www.icaivisakhapatnam.org

ChairmanCA. M. Chalapathy Rao

Vol # 6 of 2019 June, 2019

EditorCA. Prasanth Kumar P.

SecretaryCA. S. Murali Krishna

Dear Esteemed Colleagues,

Chairman Writes .......

The General Elections in the Country and Assemblyelections in the state have concluded and results havealso come. The people of the country and state havegiven clear mandate. This gives ample strength to thenewly formed Governments in State and Centrerespectively.

The much awaited project of Self Service Portal of ICAIis going to be operational. This will make ICAI progresson the path of digitalization. Members can click on“eservices” link on www.icai.org home page to accessthe Self Service Portal.

The Government of India initiative for Digital Storage ofDocuments such as PAN, Driving Licence, Vehicle RC,Educational Qualification certificates through itswebsite www.digilocker.gov.in is gaining momentum. Irequest the members to utilize the facility andencourage others too. It will help to preserve thevaluable documents in digital platform. Driving licencecan be shown through digiloclker app if physicaldocument is not available. For complete details you canvisit www.digilocker.gov.in.

I urge all the members to pay their membership fees tothe ICAI by 30th June 2019. Also make generouscontributions for CABF.

Forthcoming Programs:

Full Day Seminars:

We are having Full Day Seminar on 08th June 2019 GSTAnnual Returns and GST Audit by CA. T. R. Rajesh fromBengaluru and CA. Sangu Rama Krishna fromVisakhapatnam.

We are having a Full Day Seminar on 15th June 2019 on“Changes in ITRs” by CA. E. Krishna Harish fromVizinagaram , Critical issues in Section 44AD and 44ADAof Income Tax Act by CA. Samvit Durga fromVizianagaram and Practical Issues in Computation ofIncome under Section 10(23C) and Section 12A ofIncome Tax Act and Changes in ITR 7 by CA. SureshKejriwal from Kolkata.

CPE Study Circle meeting

On 3rd June 2019 we are having a study circle meetingon “Recent Changes in GST” by CA. Sunil B Gabhawalafrom Mumbai.

On 12th June 2019 we are having a study Circle meetingon “Recent changes in Gifts under Income Tax Act” byCA. T. Ramprasad from Visakhapatnam.

On 19th June 2019 we are having a study circle meetingon “Corporate Fallouts a Case Study” by CA. BoyinaNarendra from Srikakulam.

Other Programs:

The 42nd Annual General Meeting of VisakhapatnamBranch of SIRC of ICAI will be held on Monday, the 17th

June 2019 at 6.00 PM. I request all the members to makeit convenient to attend the same.

On 21st June 2019 the Branch is celebrating InternationalYoga Day by organizing lecture importance of Yoga andTeaching Yoga by expert in the field of yoga.

CA Day

Institute of Chartered Accountants of India has comeinto existence on 1st July 1949 and we celebrate andrecognize the day as CA Day. We rededicate ourselvesto the profession. With its humble start the professionhas now grown in leaps and bounds and ICAI hasachieved recognition as a Premier Accounting Body notonly in the country but also globally.

On the eve of CA day, we are organizing games forchildren and ladies of our fraternity, we are organizingBlood Donation camp on 30th June and 1st July.

ICAI is completing 70 years and it is a proud momentfor each one of us to be part of this successful journey.I request all the members to actively participate in eventsfor CA Day.

Activities in May 2019:

On 4th May we have conducted full day seminar onCompany Audit and Recent Changes in TDS byCA. Sanjay Jain from Hyderabad and CA. D. R. Venkateshfrom Bengaluru. The program was well received bydelegates I thank both the resource persons for makingthe seminar lively and interactive.

The Three Day Advanced Workshop on GST on 10th,11th&12th was a grand success. There were 183 delegatesregistered from across country. We had delegates fromOngole, Hyderabad, Jeypore and other districts ofOdisha apart from members in Industry and membersfrom the branch. The presentations by eminent speakersCA. Mandar Telang, CA. Jatin Harjai, CA. PrasannaKrishnan, CA. Jatin Christopher, CA. Venugopal Gella,CA. Vinay Gandhi, CA. Anil Bezawada, CA. Ashish KumarAgarwal were very well received by the delegates. I thankCA. D Prasanna Kumar, Member of GST and IndirectTaxes Committee of ICAI for inaugurating the three daysworkshop. My thanks to Indirect Tax Committee of ICAI

for giving this opportunity to host the meeting.

On 16th May 2019 we have conducted as Study Circlemeeting on Joint Development Agreements under GST.The speaker CA. Anil Bezawada has brought the subjectin a very effective manner and was well received bymembers.

On 18th May 2019 we have conducted a workshop onSharing Experiences in Bank Audit 2019. The discussionwas led by CA. V. S. Prakasa Rao and CA. T. L. N. Bharati.The speakers have brought out good points which wereactively supplemented by participants.

On 25th May 2019 we organized a Half day Seminar onRecent Changes in Labour Laws by Mr. S. V.Ramachandra Rao. The speaker discussed all the majorchanges affecting the business in labour laws.

I thank all the speakers for their efforts in sharing thevaluable knowledge with the members.

On 3rd May 2019 we conducted a study group discussionto send comments on exposure draft AS 17.

On 5th May 2019 we conducted a study group discussionto send suggestions for Pre Budget Memorandum.

I thank the members for sparing their valuable time andparticipating in study group.

MEMBERS DIARY FOR THE MONTH OF JUNE 2019

Date & Day Venue & Time CPE Hours Name of the Programme & Speaker

03.06.2019 ICAI Bhawan CPE Study Circle Meeting Recent Changes in Goods and Service Tax

Monday 5.30 pm to 8.30 pm CPE 3 Hours CA.Sunil B Gabhawalla

08.06.2019 ICAI Bhawan Full Day CPE Seminar Seminar on GST Annual Returns &

Saturday 10.00 am to 5.00 pm CPE 6 Hours GST Audit

CA. T.R. Rajesh, Bengalore

CA. S. Ramakrishna, Visakhapatnam

12.06.2019 ICAI Bhawan CPE Study Circle Meeting Recent Changes in Gifts under

Wednesday 5.30 pm to 8.30 pm CPE 3 Hours Income Tax

CA.T. Ram Prasad, Visakhapatnam

15.06.2019 ICAI Bhawan Full Day CPE Seminar CPE Seminar on changes in Income Tax

Saturday 10.00 am to 5.00 pm CPE 6 Hours Returns, Presumptive Taxation and

NPO Taxation

CA.E.K. Harish, Vizianagaram

CA.Samvit Durga, Vizianagaram

CA.Suresh Kumar Kejriwal, Kolkata

19.06.2019 ICAI Bhawan CPE Study Circle Meeting CPE Study Circle Meeting on Corporate

Wednesday 5.30 pm to 8.30 pm CPE 3 Hours Fallouts - A Case Study

CA. Narendra Boyina, Srikakulam

21.06.2019 ICAI Bhawan

Friday 8.00 am to 9.30 am

We have conducted ISA Revision classes on 15th and 16th

May 2019. Also ISA Eligibility test was organized at Branchon 25th May 2019.

Before concluding, I request you to block two days inyour diary for our forthcoming Sub Regional Conferencein the State of Andhra Pradesh on 5th and 6th July 2019“Shreyas” Excellence in Profession. Our Profession isseeing constant changes and also many newer areas areemerging. Hence, this Sub Regional Conference beingorganized by SRIC of ICAI, hosted by VisakhapatnamBranch of SIRC of ICAI. The topics chosen are designedto meet the requirements of Chartered Accountantsboth in Practice and Service. This mega event will be anideal platform for the members to network and to havequality deliberations, exchangeof views and ideas for thebetterment of our profession. Besides this,theConference will nurture the feeling of togetherness &belongingness amongst us. I request you all toparticipate actively in making this mega event a grand

success.

With ward regards

CA. M. Chalapathy Rao

Chairman

International Yoga Day

VISAKHAPATNAM BRANCH OF SIRC OF ICAI

ONE TIME PAYMENT DELEGATE FEE (2019-20)

Registration Form

To

The secretary,

Visakhapatnam Branch of SIRC of ICAI,

ICAI Bhawan,

VISAKHAPATNAM -530 003

Dear Sir,

I/We have enclosed Cheque No....... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . of ..... . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Bank dated

.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . for Rs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ./- in favour of VISAKHAPATNAM BRANCH OF SIRC OF ICAI,

VISAKHAPATNAM towards my/our ONE TIME DELEGATE FEE PAYMENT for CPE Seminars at Visakhapatnam Branch

for the period from 01.04.2019 to 31.03.2020.

Details of the Member/Members

S.No Name of the Member Date of M. No Mobile No. E-mail ID

Enrolment

Thanking You,

Yours Truly, GST No. : .. .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Signature

For NEFT / RTGS payments :

ACCOUNT NAME : VISAKHAPATNAM BRANCH OF SIRC OF ICAI

ACCOUNT NO : 024510011011521

BANK NAME : ANDHRA BANK

BRANCH NAME : PITHAPURAM COLONY

IFSC CODE : ANDB0000245

Please forward the UTR No. , Name and Membership No. to the

following mail ID : icaivskpbranch@gmail.com

One Time Fee Structure for 2019-20

Rs. 4,000/- + Rs. 720 (GST 18%) for members enrolled before 31.03.2014

Rs. 3,000/- + Rs. 540 (GST 18%) for members enrolled on or after 01.04.2014

Rs. 1,000/- + Rs. 180 (GST 18%) for members who qualified on or after May 2018

The above Onetime fees is exclusive of GST.

AN INSIGHT INTO “GST ANNUAL RETURN”

............... A Compilation of Facts

By CA. Ravi Shankar Sistla, FCA, LLB

CA.Malladi Muralidhar, FCA, AIII, DISA, LLB

“Try to learn something about everything and everything aboutsomething” by Thomas Huxley.

The due date for filing the very first GST Annual return

is fast approaching. The Annual Return in

GSTR-9/9A/9B isa “factual Re-presentation”

of already presented facts in GSTR-3B & GSTR-1

during the reporting year and later. It also presents the

head-wise taxes payable and paid and allows the assessee to pay

any differential tax.

Background:

Section 44 of the dual GST Acts mandate every regular taxpayer registered under the said Acts

to submit their Annual Return(AR) in Form GSTR-9 for every financial year by 31st December of the

year following the financial year. As GST came into force w.e.f 1st July 2017, the very first AR under

the Acts was to be submitted in the GST common portal for the financial year 2017-18 by the 31st

December 2018. However, even as the relevant forms were notified only in September 2018, the

electronic/online formats were provided by the GSTN only in early May 2019 after incorporating a

few changes in the form as recommended in the 31st Council Meeting of the GST Council in December

2018. The Council had also in the Meeting recommended to defer the due date for submitting the

annual return for the financial year 2017-18 to the 30th June 2019.

The GSTR-9 consists of details namely,

1. Outward Supplies,

2. Inward supplies subject to tax under reverse charge mechanism for the returning period and

3. GST Taxes i.e. GST liability under the different tax heads i.e. IGST, CGST&S/UT-GST and

4. The quantum of ITC availed by the assessee under the respective heads thereby facilitating the

computation of total tax liability for the reporting period under each tax head.

Towards this direction, the AR aims at consolidating the information already furnished in the

periodical returns filed by the registered taxpayer during the year in Form GSTR 3B &GSTR 1 and

even in the said returns for the subsequent financial year which contain information pertaining to

the reporting financial year. The framework of Annual Return and GST audit is presented in a chart

to give more clarity to the readers and show the difference of Facts in both the Forms.

*i. Unless GST-3B & GSTR-1 filed, GSTR-9 cannot be filed And Unless GSTR-9 has to be filed along with 9C.

ii. GSTR-9/9A/9B and 9C can’t be revised or rectified.

iii. Both Forms 9/9A/9B & 9C for the FY 2017-18 to be furnished electronically on or before 30thday of June2019.

iv. All entities having GST registration are required to file GST annual return for every financial year irrespective

of their turnover during the return filing period.

GST ANNUAL RETURN / FORM GSTR- 9

Not all categories of taxpayers who are required to register under the GST Acts are required to file the AR

every financial year. The Annual Returns (AR) in Forms GSTR-9, GSTR-9A and GSTR-9B are respectively

applicable to the regular taxable persons (one who is engaged in effecting outward supplies and is liable to

pay tax u/s 9 of the Act); composition dealers who are liable to pay tax u/s 10); and e-commerce operators.

Other categories of taxable persons viz., an input service distributor; a person required to deduct tax u/s

51/52 of the Act; a casual taxable person; and a non-resident taxable person are not under any obligation to

submit the AR. We limit our discussion only to Significance, Procedure and Important Issues along with

Resolutions of GSTR-9 in this Article.

A. Pictorial presentation of GST Annual Return GSTR-9: The return is divided into 6 Parts as depicted

below: (This Consists of 6 Parts containing 19 Tables)

B. Important Points for consideration:

1. Even if an assessee has not effected any outward supplies or claimed any ITC during the year is

required to file a ‘Nil’ Annual Return. Similarly, a person who has got his registration cancelled or

Dormant business (including Business transferred) during the year is also required to file the

Annual returns.

2. All the periodical Forms i.e., GSTR-1 and GSTR-3B for the financial year 2017-18 (from July 2017 to

March ’18) must have been submitted before filing the AR.

3. A Registered person who has opted in and opted out of composition is required to file both GSTR 9

& GSTR 9A for the relevant periods.

4. No revision of GSTR-9 is permissible. Further, as the assessment and determination of tax demand,

if any, will be based on the figures declared in the AR, the veracity of the GSTR-9 assumes a greater

significance – making the assignment even more challenging.

5. Declaring incorrect information in the Annual returns may result in multiple implications including

tax demands, levy of interest and penalties leading to avoidable litigations that could follow for several

years.

6. There are three types of fields in the electronic Form GSTR-9:

a. fields which are auto-populated and blocked (denying any modification);

b. fields which are auto-populated but editable (open for modification); and

c. blank fields where data needs to be manually entered

While data in the fields of type ‘a’ above cannot be touched, allowing the auto-populated data in

type ‘b’ above implies that the data is open for correction, if necessary, in order to rectify errors

committed while declaring the data in the monthly returns which could not be corrected

subsequently.

7. ITC which has not been claimed thro’ GSTR-3B during the year cannot be claimed in the GSTR-

9(Annual return). Further, ITC which is pertaining to the reporting financial year but which has been

claimed in the subsequent financial year shall also have to be reported in the AR in Table 10. However,

no new refund can be claimed thro’ this AR.

8. However, on account of consolidation of the outward supplies, inward supplies and ITC, a fresh

liability may arise while representing the facts. Certain transactions are not reported in the GST

returns, but these affect the tax liability at the end of the annual period. Supply without consideration

and goods sent on approval basis, or inputs or capital goods sent to the job workers and have not

received them by one or three years respectively and were missed oversight while filing GSTR-3B &

1.

9. Tax Liability cannot be paid in GSTR-9, but differential liability arising on account of additional

information/supplies reported or reversal of ITC may be shown and paid later using Form DRC-03.

10. Aggregate value of all inward supplies received from registered persons on which tax is payable on

reverse charge basis shall be declared here. Table 4B, Table 5 and Table 8A of FORM GSTR-4 may be

used for filling up these details.

C. Consequences for not filing the AR:

1. Notice to defaulters who have not filed the AR within the due date u/s 46 of the Acts.

2. As per section 47(2), Late fees for delayed filing is Rs 100/- per day per Act subject to a maximum

limit of 0.25% of the “turnover” in the state. This late fees is leviable separately under both the Acts

and therefore, effectively, the fees per day would be Rs 200/- with an upper cap of 0.50% of the

turnover in the state. ‘Turnover in the state’ shall mean the aggregate value of all outward supplies,

including taxable and exempt supplies and exports whether intra-state or inter-state. (refer section

2(112) for the meaning).

3. Besides, the defaulter is also liable for a general penalty for contravening the provisions of the Act

which may extend upto Rs 25,000 under each Act.

D. Reporting / Disclosures sought in the Return form:

I. Outward Supply Table 4 & Table 10:

a. Outward supplies in this Table shall contain:

i. all outward supplies and advances including exports on which tax has been declared

in GSTR-3B pertaining to the financial year 2017-18 whether or not filed within their

due date i.e., even when such returns pertaining to 2017-18 were submitted during

2018-19 (reported in Table 4); and

ii. taxable outward supplies and advances pertaining to financial year 2017-18 which have

neither been declared in financial year 2017-18 nor in 2018-19 (reported in Table 10).

Tax liability on such supplies shall have to be discharged through DRC-03.

But shall exclude all outward supplies and advances pertaining to financial year 2017-18 and

which have been declared in the returns of financial year 2018-19 (which shall be reported

separately in Table 10/11).

b. Information in all the fields in this Table 4 except 4G (inward supplies subject to RCM) is collated

(auto-populated) based on GSTR-1 returns filed by the assessee while the information for

4G is auto-populated based on information submitted in GSTR-3B. However, if merely the

turnover has been declared in GSTR-1 of 2017-18 but tax has been discharged in 3B for 2018-

19, then such turnover is to be declared in Table 10 and not in Table 4. Though the figures are

auto-populated in this table, all fields are open to editing which implies that the respective

figures can be modified, if necessary, so as to rectify errors or to cover situations mentioned

in a(ii) above.

c. Credit Notes and Debit Notes issued by the assessee in the subsequent financial year (FY

2018-19) against supplies made during the 2017-18 shall not have to be declared the AR for

2017-18 but in the AR for 2018-19.

d. The Illustrations may be helpful in this regard:

II. Inward Supply Table 6 (filled by Assessee):

a. The Data in Table 8A is Auto-Populated from GSTR-2A and the same is compared. Any unclaimed ITC

remaining after 31st Mar’19 is to be ignored and Lapsed.

b. The Illustrations may be helpful in this regard:

Illustrations of Disclosure of Inward Supplies in GSTR-9 based on different situations:

E. Issues & resolutions in Form 9:

1. a) Credit of ITC not available in 2A, but claimed in return– Yes, ITC 100% as shown in

GSTR-2A can be claimed as per sec 16(2) with inserted proviso in Rule 36.

b) Credit of ITC available in 2A, but Not claimed in return but available in books–Experts says ‘No ITC’

can be claimed as Last date of claim was 31st Mar’19. But we are of the opinion that the same can be

claimed since notification cannot restrict an ITC when sec 17 never refers to the same. This will be

tested in water in the times to come and shall be allowed though there is no legal backing available

as per sec 16(2) right now. Recent Delhi HC decision in this regard is very helpful quoted as “ITC

credit cannot be denied to Recipient for the default of the Supplier” by issuing a notice to

Union of India and posted for hearing in 18th sept’2019.

1. a). Any Tax paid to GST dept by supplier as per Show Cause Notice at the time of seizure of

goods –ITC cannot be claimed as per the provisions of sec 17(5). But in Bonafide case if proved ITC

can be claimed, eg. Unncessary harassment though all documents are available, or GST officer rejects

the Tax invoice saying wrong valuations etc.

b. Tax Recovered by GST dept through a SCN from defaulted registered person i.e. from

Supplier who did not file or pay taxes, whether ITC can be claimed being a violation of sec

16: Yes. ITC can be claimed, but it is the assessee who has to provide a proof/evidence which

makes his life difficult. A certificate from concerned supplier’s Assessing officer stating the

fact that the department has collected the requisite taxes and the tax related to the recipient’s

transaction in full will be the only option.

3. Turnover whether for Apr17-Jun17 to be shown in GSTR-9 – No clear cut guidance but TO has to

be accounted for 9 months only as per ICAI Handbook and in various FAQ’s.

Also as per CA Jatin Christopher in CA Journal says 12 months turnover. Therefore, it is better to show

12 months being a better choice as it may bring attention of the GST officers when there is a difference

in TO as per books / IT returns and GSTR-9 and may send notices.

But there is an instructions notified by Notification No. 39/2018 dated 04th September 2018 says “No”,

clearly mentions that only details for the period July 2017 to March 2018 are to be provided in GSTR-9.

4. Turnover missed in months of Jul’17 to Mar18, how to show when declared in Apr-Jun’18: The

same must be disclosed in AR for FY 17-18.

5. Disclosure of HSN wise data – It is very difficult to get HSN codes for each & every Inward supply

since the inward supplies related to supply from un-registered person or a wrong classification by big

corporate house will be a very difficult task. But Capturing 10% of supplies appears being easy, disclosure

is required to that extent.

6. There is no availability of HSN codes or classification issue for Inward supplies or rate difference

exists: In our opinion, wherever not possible, the same may be ignored and same shall be assessed by

GST officers later.

7. Whether to file GSTR-9 even though his registration has been cancelled or yet to be cancelled

but applied for cancellation before 31st March 2018: Yes sec 44(1) says registered person is required

to file Annual return. Even if registration is cancelled or yet to be cancelled also were a registered person

under the act, hence it is a must to file GSTR-9.

8. If Outward supply missed in both GSTR-1 & 3B till Mar’2018, any option? : Yes if the same is missed

to be reported in GSTR-1 / GSTR-3B up to Mar 2018, Tax liability arising can be paid through DRC-03.

F. Conclusions:

Learning something new has its own charm, but in GST regime it gives one only 25% knowledge, unless

technology wrt GSTN is mastered and requires 1st hand experience & expertise. Unless members are

equipped fully with everything eg. the provisions of the Law, GSTN / Facility available for Filing, how to fill/

where to fill etc, it becomes very difficult to handle the regime. It takes away most of the time due to Lack

of Planning or Lack of Reading books, Notifications, Handbooks etc. Lord Krishna in Bhagvad Gita says to

Arjuna “You have a right to perform your prescribed duty, but you are not entitled to the fruits of

action. Never consider yourself to be the cause of the results of your activities, and never be attached

to not doing your duty.” Therefore, all of us equip ourselves and Plan for completion of the GST audit as a

duty and Leave the fruits of the actions. There are always risk we carry that we are likely to be exposed off

with notices soon after filing due to wrong understanding of law or lack of time for analysis, though Assessee

Files GSTR-9.

“If you set your goals ridiculously high and it’s a failure, you will fail above everyone else’ssuccess.” The Last dates of GST Audit is fast approaching, but a limited time

available for carrying out a GST audit, a different approach is expected

an assurance beyond sphere. The Type of books required

are not kept, but information required in GSTR-9

multifold and beyond Tax audit format.

GST AUDIT

on the other hand is a

“Reconciliation in Form – GSTR 9C”

between what has been reported in GSTR-9 and the Books of account.

“The future belongs to those who prepare for it today”.

The Audit cum certification requires a huge time

for its compliance.

Background:

The due date for filing the very first GST Annual return & GST Audit with Reconciliation Statement is fast

approaching. The Annual Return in GSTR-9/9A/9B is a “factual presentation or Compilation” of already

presented facts in GSTR-3B & GSTR-1 during the reporting year and later with respect to FY 2017-18. It also

presents the head-wise taxes payable and paid and allows the assessee to pay any differential tax. Whereas

GST Audits primary aim is to “True & Correct” statement of particulars providing a scope for rectification

wrt outward supplies. This is a different challenge being not a Tax Audit conducted under GST audit, to

verify books as per the Form-9C bringing forthwith the Correct Turnover, Correct Claim of ITC which paves

a path for Correct discharge of Tax Liability.

A. GSTR Audit in Framework of Form-9C: (Reconciliation Statement & Certification- Filing, Format &

Rules):

Section 35(5) commences with the expression “every registered person whose turnover during a financial

year exceeds the prescribed limit” whereas the relevant Rule 80(3) uses the expression “every

registered person whose aggregate turnover during a financial year exceeds two crore rupees”. It

must be noted that the word turnover has not been defined whereas the expressions “aggregate turnover”

has been defined. One may note that the expression “turnover in State or turnover in Union territory” is

also defined.

GSTR-9C is the GST reconciliation Statement for a particular FY to be filed by taxpayers on or before 30th

June’2019 extended from 31st December after being certified by CA’s. It must be filed along with the

GSTR-9 (Annual Returns) and the Audited Financial Statements on the GST Portal or be filed through the

facilitation centre.

AN OVERVIEW OF GST AUDIT

............... A Vertical Challenge

By CA.Malladi Muralidhar, FCA, AIII, DISA, LLB

B. Features of GSTR- 9C:

v GSTR-9C is a statement of reconciliation between:

Ø The Annual returns in GSTR-9 filed for an FY, first being 2017-18 and

Ø The figures as per Audited Annual Financial statements of the taxpayer.

v It is certified by the CA. It can be considered to be similar to that of a tax audit report furnished

under the Income tax act. It will consist of gross and taxable turnover as per the Books reconciled

with the respective figures as per the consolidation of all the GST returns for an FY. Hence, any

differences arising from this reconciliation exercise will be reported here along with the reasons

for the same.

v The certified statement shall be issued for every GSTIN. Hence, for a PAN there can be several reports

of GSTR-9C.

C. Pictorial presentation of GST Audit in 9C for easy understanding:

Part-A is Reconciliation Statement and

Part-B is Certificate to be issued by GST auditor

This Consists of 2 Parts containing. Part -A consists of 4 sub Parts & 16 Tables with Reasons for un-

reconciled figures and Part- B consist of 1 sub part for Auditors recommendation of Liability due to

non-reconciliation ratewise.

D. Issues & Resolutions in Form 9C:

1. Turnover - includes all forms of supply:

Section 35(5) commences with the expression “every registered person whose turnover during

a financial year exceeds the prescribed limit” whereas the relevant Rule 80(3) uses the expression

“every registered person whose aggregate turnover during a financial year exceeds two crore

rupees”. It must be noted that the word turnover has not been defined whereas the expressions

“aggregate turnover” has been defined. One may note that the expression “turnover in State or

turnover in Union territory” is also defined.

In this backdrop the following understanding is relevant: a) Aggregate turnover is PAN based

while turnover in a State/ UT is similarly worded except to the extent that turnover in a State/ UT

is limited to a State; b) It is therefore, reasonable to interpret that the word turnover used in

section 35(5) ought to be understood as aggregate turnover (PAN level). c) For the financial year

2017-18, the GST period comprises of 9 months whereas the relevant section 35(5) uses the

expression financial year; Therefore, in the absence of clarification from Government and to

avoid any cases of default, it is reasonable to reckon the turnover limit prescribed for audit i.e.,

Rs. 2 crores for the whole of the financial year which would also include the first quarter of the

financial year 2017-18.

2. “Aggregate Turnover” :

a. Taxable value of stock transfers while examining this threshold limit: The

expression aggregate turnover (PAN level) is considered, please consider the taxable value

under section 15 and not the amount as accounted in the books of accounts. E.g. do not

ignore taxable value of stock transfers while examining this threshold limit.

b. Turnover as Books or GSTR-1 /3B which is to be considered: Turnover to be

declared under this Sl. No. 5A must purely flow from the ‘audited annual financial

statements’ even if such turnover consists of adjustments/ revenue recognition on

account of a requirement of an Accounting Standard (E.g.: AS-7 in case of ‘Construction

Contracts’).

c. Supply of alcohol for human consumption be included in determining the

threshold limit of Rs. 2 crore by a person registered under GST: The definition of

aggregate turnover includes exempt turnover. Exempt turnover is defined under CGST

Act to mean supply of any goods or services or both which attracts nil rate of tax or which

may be wholly exempt from tax under section 11, or under section 6 of the Integrated

Goods and Services Tax Act and includes non-taxable supply.

d. ‘Aggregate turnover’ shall whether include stock transfers: Section 2(6) of CGST/

SGST Act defines aggregate turnover to include ‘inter-State supplies of person having

same PAN’. The ‘aggregate turnover’ shall not include stock transfers effected within

the same State having single GSTIN for the purpose of determining the threshold limit.

However, where more than one GSTINs has been taken for branches located in the same

State or located in another state, then such branch transfers shall be included for

computing threshold limit of Rs.2 crore to identify applicability of this audit requirement.

3. “Period” to be covered for Audit: It is reasonable to take TO for a period of 9 months only

(even as per ICAI Hand book) though it is better to take turnover of 12months. A word caution if

they interpret the provisions in their favour as 12months, the assessee will be in soup. Also CA.

Jatin Christopher in CA Journal said that it is suggested to carry out 12 months even if Turnover

is “Nil” in July’17-Mar’18 and

Turnover is more than 2Cr. In Apr’17-June’18. We have to take a call and presume safely and take

MRL’s mentioning the same.

4. Deemed supplies in sl. No. 5A: It must not include “Deemed supplies under Schedule I” in 5A as Sl.

No. 5D separately covers such adjustments.

5. a) Whether to include Advance received for providing exempted services for Adjustment in

sl no. 5C: No, don’t adjust the Advance received for providing exempted services as on 31st March,

2018 ( on which no GST is payable)

b) Financial advances received which are to be adjustable against any services – No, don’t adjust

the supply not being a financial transaction.

6. Whether to declare Credit notes issued in relation to exempt supplies, zero rated supplies

and non-GST outward supplies: Credit notes related to zero-rated supplies are already reported

in FORM GSTR-1, in FORM GSTR-9 as well as in books of accounts, such credit notes may not be

declared in this Sl. No. 5J.

7. Issuance of financial credit notes: the value of financial credit notes is to be reduced from the

financial statements and not the GST Annual return, it is required to be adjusted in Sl. No. 5J of FORM

GSTR-9C.

8. Incentives/ rebate received from supplier: Where the taxable person has reduced the incentive/

rebate received from the cost of purchase in the books of accounts, the said amount will be added

under Sl. No. 5O (“Reasons not listed above” category) so as to reconcile with value declared in

FORM GSTR9.

9. Whether Refunds of Late fees or Refund of erstwhile law received are Refunds u/s 54 (to be

reported in Table-15B): No, The said refunds are not refunds as per provisions of sec 54, hence

shall not disclosed in the form anywhere. No reported at all.

10. Taxpayer has received a notice from its jurisdiction range office that there is a tax difference

between GSTR-1 vs GSTR-3B / GSTR-3B vs GSTR-2A. Whether such tax differences are to be

reported in total demand of tax in Table-15E? No, demand of tax for which an order confirming

the demand has been issued by adjudicating authority shall be reported in Table-15E. Only notice

received asking for reasons / reconciliation of tax differences between returns filed cannot be said

to be an order confirming demand of tax. So, the same will not be reported in Table-15E.

11. Chartered Accountant required to be registered as a GST practitioner for the purpose of

certifying FORM GSTR-9C: The GST Act/ Rules do not vest a GST practitioner with the power to

audit under section 35(5)

14. Related party Transaction w.r.t Sch I : It is very difficult to capture such transaction unless we

carryout a deep investigation into the affairs of the company, hence it is suggested that Mgt

representation letter (MRL) disclosing the transactions may be useful being one of the alternatives.

15. Whether any documents for Cross charge between distinct persons not available - Separate

invoice(s) has to be raised mandatorily as per act & rules. If they are not available, then disclosure is

a must in the audit report.

16. Rate / Classification issues: Table no. 11 makes Life difficult, a lot of planning is required to

derive ratewise Liability, i.e. Additional amount payable but not paid. Better to inform through

audit report in case of Liability could not be crystalised ratewise. A word of Caution, GST officer may

adopt the Higher rate assessing the Tax Liability. Note that No rate-wise breakup is required in

Table 16 with regard to the additional tax payable.

due to the non-reconciliation of the input tax credit as per Table 13 and 15.

17. Re-Reversal of ITC u/s 37 : It is to be noted that time limit of 180 days specified in 16(4) is not

applicable to claim for re-availing of any credit, that has been reversed earlier (notified wef 13/06/

18).

18. UDIN No. for Certification: UDIN is Mandatory for all certifications under IT act and GST act Ist

April’2019, and hence mandatory for GST Audit.

19. GSTR-9 and FORM GSTR-9C be filed separately: Section 44(2) of the CGST/ SGST Act, 2017

provides a registered person to file annual return in FORM GSTR-9 along with a copy of the

reconciliation statement in FORM GSTR-9C. Thus, FORM GSTR-9C has to be filed along with FORM

GSTR-9.

20. Few Illustrations may be useful while carrying out the Audit:

Illustrations of Disclosure of Inward Supplies in GSTR-9 based on different situations

C. Consequences for not filing the AR:

1. Notice to defaulters who have not filed the 9C within the due dates.

2. Penalty or Late fees for delayed filing is Rs 100/- per day per Act subject to a maximum limit of

0.25% of the “turnover” in the state as stated in GSTR-9 may be levied.

3. Besides, the defaulter may be required to pay a general penalty for contravening the provisions of

the Act which may extend upto Rs 25,000 under each Act.

D. Mechanism of payment

There are no provisions under the law which prescribes the mechanism of payment of the additional tax

liability that may arise out of reconciliation. However, upon the analysis of the form it can be seen that it

requires mandatory payment of the differential tax liability in cash.

The Following may be useful to note as per :

i. It does not permit utilization of the balance in electronic credit ledger for such payments.

ii. Where the tax paid is incorrectly shown on the lower side in Form GSTR 3B, then Table 9 of Form

GSTR 9 would show a higher tax payable (which would be as per the consolidated figures of

outward supplies in Form GSTR 1 and inward reverse charge supplies in Form GSTR 3B) than total

tax paid in cash and ITC (actual tax paid in Form GSTR 3B). In this situation, the differential tax

payable can be paid through Form DRC-03.

iii. One should be careful here that if such differential tax is already paid through Form DRC-03 while

reconciling Form GSTR 9, the same difference arising in Form GSTR 9C should not be subjected

to additional liability as per the Auditor’s recommendations in Part V of Form GSTR 9C.

E. RESPONSIBILITY OF AUIDTOR GST AUIDT :

The Audit is conducted by same auditor or different auditor has no impact as long as it is certified.

There is huge responsibility as the words prescribe “True & Fair” which calls for a “Reasonable

assurance” (and not a “High Level assurance”). The Audit starts with the following in depth analysis,

i. Verification thoroughly the Registration whether properly categorised wrt “Nature of

Business” and “HSN Codes”.

ii. Types of “Supply” u/s 7 and sch I,II & III.

iii. Identifying “Time of Supply” and “Place of Supply”

iv. Measuring Valuation as per sec 15 and reconsidering the word “Sole” Consideration

v. Claimed ITC as per sec 16 (eligible credit) while restricting it u/s 17 (Ineligible credit)

vi. Maintaining records as per the provisions of sec 35 while electronic cash & credit

ledger electronically.

vii. Reconciliation of Turnover of that Entity and not that of Registered person (the word

used is “Derived Turnover”)

viii. Computing the Non-GST, Exempted, NIL rated transactions separately including “No

Supply” in Table 7.

ix. The Classification and Understanding of HSN codes

x. Delimiting any overlapping transactions with earlier Regime wrt Apr17 to Jun17

xi. Recalculating Tax demands or Refunds

xii. Most difficult part that ITC Declared in GSTR-9 with ITC availed on expenses as per

Books of account audited.

F. Conclusions:

There are few difficulties having large impact like HSN Codes /classification, Interpretation of Law, Valuation

as per books of account vs. Valuation as per sec 15, “No Supply” category, ratewise classification for un-

reconciled turnover, same last date for GSTR-9 etc a hindrance to audit. Therefore, Let us equip ourselves

and Plan our time for completion of the GST audit in time. There is always huge risks associated while carrying

out the audit to understand the “Supplies” and Certifying “True & Fair” without a bias sitting on quasi-

judicial authority. We are likely to be exposed off with notices soon after filing due to wrong understanding

of law or lack of time to analyse wrt a transaction. Assesee’s if tagged in with warnings with the challenge

what we have, always saves us to some extent. Therefore, go ahead with MRL for both forms 9 & 9C separetly,

Though assessee files GSTR-9 & 9C. Note that MRL and working papers is a must for 9C which will be saviour.

SUPREME COURT

TAX UPDATE CA. Ambati Chinna Gangaiah, agcpower@icai.org, Cell : 08801032969AP VAT / GST Update

HIGH COURT

HIGH COURT JUDGMENTS ON TRANSIT RELIEF - PROBLEM TO UPLOAD TRAN 1

GOs ISSUED U/APVAT ACT

CESTAT

ADVANCE RULINGS GIVEN IN 2018

ADVANCE RULINGS GIVEN IN 2019

NOTIFICATIONS ISSUED UNDER GST (GBIC)

CIRCULARS ISSUED UNDER GST (CBIC)

Income Tax Judgments Update

GIST OF JUDGMENTS OF SUPREME COURT

GIST OF JUDGMENTS OF HIGH COURTS

INCOME TAX APPELLATE TRIBUNAL

10.05.19

10.05.19

10.05.19

Dear Member

You are cordially invited to participate in Games as part of CA Day Celebrations.

Date Venue & Time Event & Coordinator

16.06.2019 Visakhapatnam Port Diamond Jubilee Cricket Tournament for Members

Outdore Stadium Please Contact :

8.00 AM Onwards CA. M. Chalapathy Rao

Mobile: 9849609836

CA .A. Vamsi Rajesh

Mobile: 9966216315

23.06.2019 AU Indoor Stadium Shuttle Badminton

9.00 AM Onwards Co-ordinator :

CA. T. L. N. Bharati

Mobile: 9440191806

Email : bharatioffice@gmail.com

23.06.2019 ICAI Bhawan Chess competitions for members

10.00 AM Onwards Please Contact :

CA. Malladi Muralidhar

Mobile: 9848130075

23.06.2019 ICAI Bhawan Games and other events are

planned for Women members

10.00 AM Onwards & spouses of members and

children

Please Contact :

CA. Bharati Devi

Mobile No. 9885673439

CA. Pavani

Mobile No. 9246673168

Breakfast from 9.00 AM at Branch

Lunch from 1.00 PM at Branch.

Regards

Chairman

Visakhapatnam Branch of SIRC of ICAI

On the above days}

CA DAY

Children Games & Family Member Games onSunday, 23rd June, 2019

CELEBRATIONS 2019

on 1st July, 2019 at ICAI Bhawan,

Visakhapatnam

Members interested may please give their children names for theparticipation in Cultural Programmes. Children can participatefor the Dance practice on Saturdays and Sundays before CA Day2019.

We request the Members to assist the branch in conducting /organising the games and events on 23rd June, 2019.

Evening Programmes1st July, 2019 Evening

Dances,Fancy Dress ShowMusic, Fun & Frolic

Skit etc.,Snacks & Dinner

Morning Programmes1st July, 2019

WalkthanFlag Hoisting

Breakfast & SeminarBlood Donation,

Professional Social Responsiblity Activities

Seminar on Company Audit and Recent Changes in TDS on 4th May, 2019

Three Days Advanced Workshop on GST on 10th to 12th May, 2019

Study Circle Meeting on Joint Development Agreements under GST on 16th May, 2019

Workshop on Sharing Experiences in Bank Audit 2019 on 18th May, 2019

Seminar on Recent Changes in Labour Laws on 25th May, 2019

Students Study Circle Meeting on Companies Audit uner the Companies Act 2013on 30th May, 2019

The Views expressed by contributors in this Newsletter do not necessarily reflect the opinion of the Branch or the Institute

Published by CA. M. Chalapathy Rao, Chairman on behalf of Visakhapatnam Branch of SIRC of The Institute of Chartered Accountants of India, Visakhapatnam

and Desgined at Maruthi Printers, D.No.30-5-17, Krishna Gardens, Dabagardens, Visakhapatnam - 20, Cell : 92469 32859, email : balajiavprasad@gmail.com

and Published for Visakhapatnam Branch of SIRC of ICAI, D.No.9-36-22/2, Pithapuram Colony, Visakhapatnam - 530 003, Ph : 0891-2755019,

email : visakhapatnam@icai.org Editor : CA. Prasanth Kumar P, Visakhapatnam Branch of SIRC of ICAI

ISA REVISION CLASSESS

ISA ELIGIBILITY TEST EXAMINATION