GST Notification 94/2020 | Bunch of new provisions and updates introduced in provisions of GST Registration, GST Cancellation, Provisional ITC Claim, GSTR 1 blocking, EWB Validity by CGST (Fourteenth Amendment) Rules 2020

GST Notification 94/2020-Central Tax ,dt. 22-12-2020

CGST(Fourteenth Amendment) Rules 2020 notified via notification 94/2020
Application for registration under Rule 8 shall be followed by biometric based Aadhar authentication or biometric and KYC documents verification unless the applicant is exempted under Section 25(6D)

Time limit to grant GST Registration increased
Time limit for system-based registration has been enhanced from 3 days to 7 days. Now registration will be granted within 7 days from the date of application instead of 3 days
In case of application by adhaar authentication or where department intends to carry out physical verification the time limit for grant of registration is increased to 30 days from 7 days.

Cancellation of GSTIN made more stringent
With insertion of new clauses to Rule 21 – Officer can proceed for cancellation of GSTIN
Clause (e) – where a taxpayer avails Input Tax Credit (ITC) exceeding than that permissible in Section 16.
(Section 16 is eligibility and conditions for claiming ITC)
Clause (f) -where the liability declared in GSTR 3B is less than that declared in GSTR 1 in a particular month.

The words “after affording the said person with reasonable opportunity of being heard has been omitted from clause (2) of Rule 21A. Impact to this will be that no opportunity of being heard will be given to a taxpayer for suspension of GSTIN, where the proper officer has reasons to believe that the registration of person is liable to be cancelled

Where there are significant deviation/anomalies between details of outward supply between GSTR 3B and GSTR1 or inward supplies (ITC) between GSTR 3B and GSTR 2B which indicate contravention of Act, department shall issue SCN in a newly introduced FORM REG-31 as to why GSTIN should not be cancelled.


Taxpayer shall be required to submit his response within 30 days of service of notice

Where a GSTIN is suspended no refund u/s 54 of CGST Act 2017 can be availed by the taxpayer. Before refund application, suspension proceedings shall be closed

Limit of claiming provisional ITC as per Rule 36(4) reduced
The limit of provisional ITC claim in respect of invoices not furnished by the corresponding suppliers has now been restricted to 5% of the credit available in GSTR 2A. This limit earlier was 10% of ITC available.
It means if claim of ITC is exceeded by 105% of credit available in GSTR 2A, same may result into suspension of GSTIN as notified earlier.
The provision shall be effective from 1st January 2021.

Rule 59 sub rule (5) duly inserted – GSTR 1 to be blocked in case of non-filing of GSTR 3B
Where a taxpayer fails to file GSTR 3B for two subsequent months, not just his EWB but also his GSTR 1 be blocked.
In case of quarterly return filers, the taxpayer who missed to file GSTR 3B for the preceding quarter shall not be permitted to file GSTR 1 or Invoice Furnishing Facility (IFF) of subsequent quarter
A taxpayer who is restricted to avail ITC as per rule 86B shall also not be permitted to file GSTR 1 where he has not filed GSTR 3B for the preceding tax period.

Restriction on Utilization of Input Tax Credit – Newly inserted Rule 86B
Rule 86B shall be affected from 1st January 2021 wherein restriction has been placed on setting off more than 99% of tax liability from ITC where the value of taxable supplies other than exempt supply and zero rated supply exceeds Rs. 50 lakhs in a month. Though few exceptions have been provided to this rule which are as follows:
(i) Where the taxpayer has paid Income Tax exceeding Rs. 1 lakh in two preceding financial year.
(ii) Where taxpayer has received refund exceeding Rs. 1 lakhs u/s 54 of CGST Act 2017.
(iii) Where taxpayer has used electronic cash ledger to pay of liability on outward supplies which cumulatively makes 1% of the total liability up to the said month
(iv) Where a person is a Government Department, Public Sector Undertaking (PSU), local authority or a statutory body.

Validity of Eway bill revised
Only one day validity is granted to cover a distance up to 200 kms instead of earlier 100 km

Samaira Tolani

Samaira Tolani is a Chartered Accountant with 4 years of experience in Compliance and Financial Reporting. She is a GST expert, currently working with IRIS as GST Consultant . Before this, she was part of compliance team of Blue Star, Piramal Pharma and Novartis. A diploma holder in IFRS with ACCA, she loves listening to music, travelling and reading fiction.

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