Amendment of Rule 43 - Notification No.14/2022-CT dated 05/07/2022

[Dipen Lathi]

Respected Experts,

Rule 43 of the CGST Rules, 2017 has been amended vide Notification No.14/2022-CT dated 05/07/2022. Accordingly, sub-clause (d) has been added to Explanation 1 in the said rule. While going through the said rule on TMI site, I find that the sub-clause (d) as per the present amendment is added to explanation under Sub-rule 1 of Rule 43.

In my understanding, the amendment is made to Explanation 1 under sub-rule 2 of Rule 43 and not to the explanation under sub-rule 1. As such, adding the new sub-clause (d) to the explanation to sub-rule 1 does not make sense.

However, when read under sub-rule 2, Explanation 1 the new clause makes sense in that the value of duty credit scripts sold would not be considered as an exempt supply for the purpose of Rule 42 and 43.

I request the experts to kindly throw light on this. Is it an inadvertent error on TMI site or is it my misunderstanding? Thank you.

CA Dipen Lathi

[Amit Agrawal]

Dear Shri CA Dipen Lathi Ji,

W.r.t. your observations, my views are as follows:

A. TMI is wrong in putting new sub-clause (d) under sub-rule (1) of Rule 43.

A1. As I can see just now and though said otherwise by you, said amendment is not put by TMI under sub-clause (d) to explanation under Sub-rule 1 of Rule 43. This may be because there are changes happening at TMI as we post here. And I am sure they will correct their mistake. And probably, there will NOT be any such mistake to be seen tomorrow at TMI. Thanks for pointing out the same.

B. Clause (3) of Notification No.14/2022-CT dated 05/07/2022 reads as under:

"In the said rules, in Explanation 1 to rule 43, after clause (c), the following clause shall be inserted, namely: –

“(d) the value of supply of Duty Credit Scrips specified in the notification of the Government of India, Ministry of Finance, Department of Revenue No. 35/2017-Central Tax (Rate), dated the 13th October, 2017, published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (i), vide number GSR 1284(E), dated the 13thOctober, 2017.”;"

C. As can be seen from above, same amendment is under 'Explanation 1 to rule 43' and same is under any explanation NEITHER under sub-rule (1) NOR under sub-rule (2).In other words, said amendment is applicable for entire Rule 43 as a whole.

C1. And subject 'Explanation 1 to rule 43' starts as follows:' "For the purposes of rule 42 and this rule, it is hereby clarified that the aggregate value of exempt supplies shall exclude:- .............. ................" In other words, subject amendment is applicable to entire Rule 42 as a whole as well.

C2. And all this makes it a perfect sense.

These are strictly personal views of mine and the same should not be construed as professional advice / suggestion.

[Amit Agrawal]

In continuation of my last post, please note that corrected / updated Rule 43 is now available at TMI.

[Shilpi Jain]

Agree, the purpose of this amendment was to not include the value of the duty scrips as part of exempt turnover while calculating the credit reversal.

AI Summary

Exclusion of Duty Credit Scrips - these scrips are not treated as exempt supplies for GST credit reversal calculations. Notification No.14/2022 adds clause (d) to Explanation 1 to Rule 43, excluding the value of Duty Credit Scrips from the aggregate value of exempt supplies for purposes of computing input tax credit reversals under Rules 42 and 43; the amendment applies to Explanation 1 generally (not to a specific sub rule), and an initial online misplacement was corrected.