DON’T BE BLACKLISTED UNDER GST
- October 25, 2015
- Posted by: Indirect Tax Professionals
- Category: News
NORMS FOR BLACKLISTING OF DEALERS FOR BLOCKING TAX CREDITS
A system of “GST Compliance Rating” has been suggested in the recent report dealing with ‘GST Registration’ released by the Joint Committee on Business Processes in relation to the proposed Goods & Service Tax Regime.
Any fall in the rating below a prescribed level will have impact of blacklisting a dealer. The rating is only a measure to facilitate informed choices by the purchasers and not a punishment measure. There should be clear declaration in the law that blacklisting does not mean that ITC claim on other non-blacklisted dealers is assured by the Government as any eligibility for ITC primarily depends on the selling dealer owning up the tax invoice and paying the due tax.
However, if the rating falls below the prescribed level resulting in that dealer becoming blacklisted, purchases from him will no longer be eligible for ITC, on self-assessment basis, (they however will be eligible for availing the ITC only after the tax has been paid by such selling dealers) by the buyers, till improvement of the rating to normal level.
DEFAULTS THAT WOULD LEAD TO BLACKLISTING A DEALER:
1. Continuous default for 3 months in paying ITC that has been reversed.
2. Continuous default of 3 months or any 3 month-period over duration of 12 months in uploading sales details leading to reversal of ITC for others. Defaulters of even a single event should also be flagged and put in public domain as being a potential black listed dealer so as to alert the buyers.
3. Continuous short reporting of sales beyond a prescribed limit of 5% (of total sales) for a period of 6 months.
Not doing the activity within the prescribed cut off dates. A system of rating the dealers based on their compliance should also be done and put in public domain to inform prospective buyers.
1. Only for regulating ITC by others.
2. Will be based on dealer rating. A dealer will be blacklisted if dealer rating falls below the prescribed limit.
3. To be put in public domain.
4. To be notified (auto-SMS) to all dealers who have pre-registered this dealer (black listed now) as their supplier.
5. To be prospective only (from month next to blacklisting)
6. Blacklisted GSTINs cannot be uploaded in purchase details. Corresponding denial of ITC to be supported by suitable provision in the law.
7. ITC reversal in hands of the buyer should take place for disowning of any tax invoice with date prior to effect of blacklisting of the seller.
8. Once blacklisting is lifted, buyers can avail unclaimed ITC subject to this dealer uploading sales details along with tax and interest.
We will keep you updated, so stay tuned.