The GST Council in its 32 nd meeting held on January 10, 2019, gave approval that the changes made by CGST (Amendment) Act,2018, IGST (Amen...
The GST Council in its 32ndmeeting
held on January 10, 2019, gave approval that the changes made by CGST
(Amendment) Act,2018, IGST (Amendment) Act, 2018, UTGST (Amendment) Act, 2018
and GST (Compensation to States) Amendment Act, 2018 along with the
corresponding changes in SGST Acts would be notified w.e.f. February 01, 2019.
Now, since the various Amendment Acts are going to be effective from first day of February, 2019, it is highly advisable to plunge into the changes and understand their implications on our business.
Earlier, the Hon’ble
President on August 29, 2018 has given its assent to these four crucial
amendment bills of GST law, which got published in the official Gazette of
India on August 30, 2018.
Now, since the various Amendment Acts are going to be effective from first day of February, 2019, it is highly advisable to plunge into the changes and understand their implications on our business.
For the ease of
understanding, we are summarising herewith section-wise tabular presentation of
amended CGST Act, 2017 (“CGST Act”)
and IGST Act, 2017 (“IGST Act”) in
comparison with the pre-amendment Acts. This tabular also discusses the effect
of these amendments along with suggestions as to further simplification of the
GST Laws.
Trust you will find
the same useful.
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Synopsis of the CGST Amendment Act, 2018
Provisions as per pre-amendment CGST Act
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Provisions of amended CGST Act w.e.f. 01.02.2019
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Effect of amendment along with analysis as to comparison
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Section 2(4) – Definition of ‘Adjudicating Authority’
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“adjudicating authority” means any
authority, appointed or authorised to passany order or decision under this
Act, but does not include the Central Board of Exciseand Customs, the
Revisional Authority, the Authority for Advance Ruling, the
AppellateAuthority for Advance Ruling, the Appellate Authority and the
Appellate Tribunal.
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“adjudicating authority”
means any authority, appointed or authorised to pass any order or decision
under this Act, but does not include the Central Board of
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Changes are made in pursuance of the
change in name of CBEC to CBIC.
Further, the National Anti-Profiteering
Authority constituted under Section 171 of the CGST Act is also excluded from
the definition of ‘adjudicating authority’.
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Section 2(17)(h) – Definition of ‘Business’
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“business” includes––
(h) services provided by
a race club by way of totalisator or a licence tobook maker in such club; and
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“business” includes––
(h)
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This changeensures that all
activities related to a race club are included in definition of business.
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Section 2(35) – Definition of ‘Cost Accountant’
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“cost accountant” means
a cost accountant as defined in clause (c) ofsub-section (1) of section 2 of
the Cost and Works Accountants Act, 1959;
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“cost accountant” means
a cost accountant as defined in clause
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Corrects typographical error
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Section 2(69) – Definition of ‘Local Authority’
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“local authority”
means––
(f) a Development Board
constituted under article 371 of the Constitution;or
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“local authority”means––
(f) a Development Board
constituted under article 371 and article 371J of the Constitution; or
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Development board constituted Article
371J of the Constitution will now be considered as local authority.
Note: Article 371J grants special
status to 6 backward districts of Karnataka-Hyderabad region by empowering
the President to establish a separate Board to ensure equitable distribution
of funds in the State’s budget to meet the developmental needs of the region.
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Section 2(102) – Definition of ‘Service’
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“services” means
anything other than goods, money and securities butincludes activities
relating to the use of money or its conversion by cash or by any
other mode, from one
form, currency or denomination, to another form, currency ordenomination for
which a separate consideration is charged;
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“services” means anything other than
goods, money and securitiesbut includes activities relating to the use of
money or its conversion by cash or by anyother mode, from one form, currency
or denomination, to another form, currency or denomination for which a
separate consideration is charged;
Explanation. ––For the removal of doubts, it is hereby
clarified that theexpression “services” includes facilitating or arranging
transactions insecurities;’.
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This
explanation provides clarity that although ‘securities’ [s. 2(h) of
Securities Contract Regulations Act, 1956] are excluded from the definition
of ‘goods’ and ‘services’ in the CGST Act, but if some service charges or
service fees or documentation fees or broking charges or such like fees or
charges are charged in relation to transactions in securities, the same would
be a consideration for provision of service and chargeable to GST.
What additionally could have been done:
Definition of services could have
further been amended to treat ‘intangible goods’ as services.
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Section 7 – Definition of ‘Supply’
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(1) For the purposes of this Act,
the expression “supply” includes––
(a) all forms of supply of goods or
services or both such as sale, transfer, barter,exchange, licence, rental,
lease or disposal made or agreed to be made for a considerationby a person in
the course or furtherance of business;
(b) import of services for a
consideration whether or not in the course orfurtherance of business;
(c) the activities specified in
Schedule I, made or agreed to be made without aconsideration; and
(d) the activities to be treated as
supply of goods or supply of services asreferred to in Schedule II.
(2) Notwithstanding anything
contained in sub-section (1), ––
(a) activities or transactions
specified in Schedule III; or
(b) such activities or transactions
undertaken by the Central Government, aState Government or any local
authority in which they are engaged as publicauthorities, as may be notified
by the Government on the recommendations of theCouncil,shall be treated
neither as a supply of goods nor a supply of services.
(3) Subject to the provisions of
sub-sections (1) and (2), the Government may, on therecommendations of the
Council, specify, by notification, the transactions that are to be
treated as—
(a) a supply of goods and not as a
supply of services; or
(b) a supply of services and not as
a supply of goods.
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(1) For the purposes of
this Act, the expression “supply” includes–
(a) all forms of supply
of goods or services or both such as sale, transfer, barter, exchange, licence,
rental, lease or disposal made oragreed to be made for a consideration by a
person in the course or furtherance of business;
(b) import of services
for a
consideration whether or
not in the course or furtherance of business; and
(c) the activities specified
in
Schedule I made or
agreed to be made without a consideration,
(1A) where certain
activities or
transactions constitute a
supply in accordance with the provisions of sub-section (1), they shall be
treated either as supply of goods or supply of services as referred to in
Schedule II.
(2) …………
(3) Subject to the
provisions of sub-sections (1), (1A) and
(2), the Government may, on the recommendations
of the Council, specify, by notification, the transactions that are to be
treated as–
(a) a supply of goods
and not as a supply of services; or
(b) a supply of services
and not as a supply of goods.
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Retrospective application w.e.f. 01.07.2017
Term ‘supply’ is amended to exclude
activities/ transactions listed in Schedule II to ensure that the activities/
transactions as per Schedule II is to determine only whether the same is
supply of goods or services. Hence, activities/ transactions listed in
Schedule II (as supply of service or supply of goods) shall be taxed only
when they constitute ‘supply’ in accordance with provisions of Section
7(1)(a), (b) and (c) of the CGST Act.
Amendments in definition of ‘supply’
are made retrospectively applicable. Thus, there shall not be any past
litigation on account of any transaction merely covered under Schedule II,
but otherwise not a ‘supply’.
What additionally could have been done:
·
Inclusive definition of supply must be made concrete with no
subjectivity;
·
Clarity must be provided on concept of composite and mixed supply as
to manner of determining principal supply and dominant intention;
·
Activities relating to repairs, maintenance, installation etc. of
movable goods must be included as supply of services in Schedule II.
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Section 9(4) – Reverse charge in case of procurement from
unregistered persons
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The central tax in respect of the
supply of taxable goods or services or both by a supplier, who is not
registered, to a registered person shall be paid by such person on reverse
charge basis as the recipient and all the provisions of this Act shall apply
to such recipient as if he is the person liable for paying the tax in
relation to the supply of such goods or services or both.
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The Government may, on the
recommendations of the Council, by notification,specify a class of registered
persons who shall, in respect of supply of specifiedcategories of goods or
services or both received from an unregistered supplier, pay thetax on
reverse charge basis as the recipient of such supply of goods or services
orboth, and all the provisions of this Act shall apply to such recipient as
if he is theperson liable for paying the tax in relation to such supply of
goods or services or
both”.
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Earlier Section
9(4) of the CGST Act has been omitted and instead, an enabling power is
granted for the Govt. to notify a class of registered persons who would be
liable to pay tax on reverse charge basis in case of receipt of specified
categories of goods or services or both (as against taxable goods or services
or both) from an unregistered supplier.
The
details of such specified persons and specified goods/services are to be
notified in future.
What additionally could have been done:
Operation
of Section 9(4) in its present form, is not conducive as the registered
recipient requires to raise self-invoice, capturing individual HSN/ SAC codes
for procurement of such specified goods or services, which is operationally
not easing business and should be done away completely.
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Section 10 – Composition Scheme
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(1) Notwithstanding anything to the contrary contained in this
Act but subject to the provisions of sub-sections (3) and (4) of section 9, a
registered person, whose aggregate turnover in the preceding financial year
did not exceed fifty lakh rupees, may opt to pay, in lieu of the tax payable
by him, an amount calculated at such rate as may be prescribed, but not
exceeding, ––
(a) one per cent. of the turnover in State or turnover in Union
territory in case of a manufacturer,
(b) two and a half per cent. of the turnover in State or
turnover in Union territory in case of persons engaged in making supplies
referred to in clause (b) of paragraph 6 of Schedule II, and
(c) half per cent. of the turnover in State or turnover in Union
territory in case of other suppliers,
subject to such conditions and restrictions as may be
prescribed:
Provided that the Government may, by notification, increase the
said limit of fifty lakh rupees to such higher amount, not exceeding one
crore rupees, as may be recommended by the Council.
(2) The registered person shall be eligible to opt under
sub-section (1), if: —
(a) he is not engaged in the supply of services other than
supplies referred to in clause(b) of paragraph 6 of Schedule II;
(b) he is not engaged in making any supply of goods which are not leviable to tax under this Act;
(c) he is not engaged in making any inter-State outward supplies
of goods;
(d) he is not engaged in making any supply of goods through an
electronic commerce operator who is required to collect tax at source under
section 52; and (e) he is not a manufacturer of such goods as may be notified
by the Government on the recommendations of the Council:
Provided that where more than one registered persons are having
the same Permanent Account Number (issued under the Income-tax Act, 1961),
the registered person shall not be eligible to opt for the scheme under
sub-section (1) unless all such registered persons opt to pay tax under that
sub-section.
(3) The option availed of by a registered person under
sub-section (1) shall lapse with
effect from the day on which his aggregate turnover during a
financial year exceeds the limitspecified under sub-section (1).
(4) A taxable person to whom the provisions of sub-section (1)
apply shall not collectany tax from the recipient on supplies made by him nor
shall he be entitled to any credit of
input tax.
(5) If the proper officer has reasons to believe that a taxable
person has paid tax undersub-section (1) despite not being eligible, such
person shall, in addition to any tax that maybe payable by him under any
other provisions of this Act, be liable to a penalty and theprovisions of
section 73 or section 74 shall, mutatis mutandis, apply for determination of
taxand penalty.
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(1)
Notwithstanding anything to the contrary contained in this Act but subject to the provisions of sub-sections (3) and
(4) of section 9, a registered person, whose aggregate turnover in the
preceding financial year did not exceed
fifty lakh rupees, may opt to pay, in lieu of the tax payable by him under sub-section (1) of section 9, an amount of tax calculated at such rate as may be prescribed,
but notexceeding,––
(a) one per
cent of theturnover in State or turnover in Union territory in case of
amanufacturer,
(b)
two and a half per cent. oftheturnover
in State or turnover in Union territory in case of persons engaged in making
supplies referred to in clause (b) of paragraph
6 of Schedule II,and
(c) half per
cent. of the turnover in State or
turnover in Union territory in case of othersuppliers,
subject to
such conditions and restrictions as may be prescribed:
Provided
that the Government may, by notification, increase the said limit of fifty lakh rupees to such higher amount, not exceeding one
crore and fifty lakh
“Provided
further that a person who opts to pay tax underclause (a) or clause (b) or
clause (c) may supply services (other than thosereferred to in clause (b) of
paragraph 6 of Schedule II), of value notexceeding ten per cent. of turnover
in a State or Union territory in thepreceding financial year or five lakh
rupees, whichever is higher.”;
(2) The registered person shall be eligible to
opt under sub-section (1), if—
(a) save as provided in
sub-section (1), he is not engaged in the supply of services,
(b) …………….
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This amendment gives effect to the
earlier decision of the GST Council to increase threshold limit for the
composition suppliers from INR 1 crore to 1.5 crores and further to enable
registered manufacturers and traders to opt for composition scheme u/s 10(1)
of the CGST Act even if they supply services of value not exceeding 10% of
the turnover in a State/Union territory in the preceding FY or INR 5 lakhs,
whichever is higher [Presently, registered persons engaged in the supply of
services (other than restaurant services) are not eligible for the
composition scheme]
The amendment also allows supply of
services to the extent of above specified limits, apart from services
referred in Para 6(b) of Schedule II i.e. restaurant services. This change
seems to be inserted in view of clause (b) of Section 10. Clause (b) mentions
about composite rate of tax on restaurant service providers. It clarifies
that for clause (b), this limit shall apply for services supplied other than
restaurant services.
What additionally could have been done:
·
It should be clarified that this amount of 10% of turnover in
preceding financial year or INR 5 Lakhs, whichever is higher, should only be
the taxable value of services - Order No. 01/2017 dated 13.10.2017
already clarifies that person supplying exempt services along with goods or
restaurant services are not ineligible for composition levy;
·
Clarification is required on nature of supply of services – Whether
inter-state supply of services will be allowed;
·
Clarification is required as to what could be the rate of tax on such
supply of services- composition rate or actual rate of tax;
·
If normal rate of tax is applicable, then whether composition supplier
would be entitled to claim ITC for such services under composition scheme?
·
It is suggested that certain percentage of turnover may be allowed for
inter-state supply of goods for the benefit of SME/MSME sector in true sense.
·
It is also required that certain service sector may also be
included in the composition scheme, which may be chargeable at higher
rate tax as against 1% so as to provide ease of business to SME/ MSME Service
providers.
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Section 12 – Time of supply of goods
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12 (2) The
time of supply of goods shall be the earlier of the following dates, namely:
—
(a) the
date of issue of invoice by the supplier or the last date on which he
isrequired, under sub-section (1) of section 31, to issue the invoice with
respect to thesupply; or
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12 (2) The
time of supply of goods shall be the earlier of the following dates, namely:
—
(a) date of
issue of invoice by the supplier or the last date on which he is required
under
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This amendment seeks to correct a
drafting error and thus includes issuance of invoice/other documents contained
in other sub-sections of Section 31like continuous supply of goods, etc.
What additionally could have been done:
·
Clarity may also be provided in respect of determining time of supply
of debit notes issued for increase in taxable value and/or tax amount of
supply of goods as the same is issued under Section 34 of the CGST Act.
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Section 13 – Time of supply of services
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(2) The time of supply of services shall be the earliest of the
following dates, namely: —
(a) the date of issue of invoice by the supplier, if the invoice
is issued within theperiod prescribed under sub-section (2) of section 31 or
the date of receipt of payment,whichever is earlier; or
(b) the date of provision of service, if the invoice is not
issued within the periodprescribed under sub-section (2) of section 31 or the
date of receipt of payment,whichever is earlier; or
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13 (2) The
time of supply of services shall be the earliest of the following dates,
namely: —
(a) the
date of issue of invoice by the supplier, if the invoice is issued within the
period prescribed under
(b) the
date of provision of service, if the invoice is not issued within the period
prescribed under
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This amendment seeks to correct a
drafting error and thus includes issuance of invoice/other documents
contained in other sub-sections of Section 31like continuous supply of
services etc.
What additionally could have been done:
·
Clarity may also be provided in respect of determining time of supply
of debit notes issued for increase in taxable value and/or tax amount of
supply of services as the same is issued under Section 34 of the CGST Act.
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Section 16(2)(b) – Conditions for availing Input Tax Credit
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16(2)
Notwithstanding anything contained in this section, no registered person
shall beentitled to the credit of any input tax in respect of any supply of
goods or services or both tohim unless, ––
(a) he is
in possession of a tax invoice or debit note issued by a supplier
registeredunder this Act, or such other tax paying documents as may be
prescribed;
(b) he has
received the goods or services or both.
Explanation.
—For the purposes of this clause, it shall be deemed that theregistered
person has received the goods where the goods are delivered by the supplierto
a recipient or any other person on the direction of such registered person,
whetheracting as an agent or otherwise, before or during movement of goods,
either by way oftransfer of documents of title to goods or otherwise;
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16(2)
Notwithstanding anything contained in this section, no registered person
shall beentitled to the credit of any input tax in respect of any supply of
goods or services or both tohim unless, ––
(a) he is
in possession of a tax invoice or debit note issued by a supplier registeredunder
this Act, or such other tax paying documents as may be prescribed;
(b) he has
received the goods or services or both.
“Explanation.
—For the purposes of this clause, it shall be deemed thatthe registered
person has received the goods or, as the case may be,
services––
(i) where
the goods are delivered by the supplier to a recipient orany other person on
the direction of such registered person, whetheracting as an agent or
otherwise, before or during movement of goods,either by way of transfer of
documents of title to goods or otherwise;
(ii)
where the services are provided by the supplier to any person on the
direction of and on account of such registered person.”;
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To satisfy the requirement of receiving services for availing
ITC, it is stated that where the services are provided by the supplier to any
person on the direction of and on account of registered person it shall be
deemed that such registered person has received the services.
Presently this deeming fiction is applicable only in case of “bill-to-ship-to” supply of goods. The same has been extended to
services as well.
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Section 16(2)(c) – Conditions for availing Input Tax Credit
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16(2)
………………………………….
(c) subject
to the provisions of section 41, the tax charged in respect of suchsupply has
been actually paid to the Government, either in cash or through utilisation of
input tax credit admissible in respect of the said supply; and
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16(2)
……………………………………
(c) Subject
to the provisions of section 41 or section 43A, the tax charged in respect of such supply has been
actually paid to the Government,
either in cash or through utilisation of input tax credit admissible in respect of the said supply; and
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This amendment seeks to include the
provisions relating to the new return format as specified in the proposed new
Section 43A, for availment of ITC.
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Section 17(3) – Apportionment of credit
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(3)
The value of exempt supply under sub-section (2) shall be such as may be
prescribed and shall include supplies on which the recipient is liable to pay
tax on reverse charge basis,transactions in securities, sale of land and,
subject to clause (b) of paragraph 5 of ScheduleII, sale of building.
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17(3)
The value of exempt supply under sub-section (2) shall be such as may be
prescribed and shall include supplies on which the recipient is liable to pay
tax on reverse charge basis, transactions in securities, sale of land and,
subject to clause (b) of paragraph 5 of Schedule II, sale of building.
‘Explanation.—For
the purposes of this sub-section, the expression ‘‘value of exempt supply’’
shall not include the value of activities or transactions specified in
Schedule III, except those specified in paragraph 5 of the said Schedule.
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It is clarified
by way of explanation that no reversal of common ITC shall be required on
activities or transactions specified in Schedule III (other than sale of land
and, subject to clause (b) of paragraph 5 of Schedule II, sale of building)
by excluding it from the ambit of ‘exempt supply’ for the purpose of
reversal.
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Section 17(5)(a) – Blocked credit on motor vehicles
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(5)
Notwithstanding anything contained in sub-section (1) of section 16 and
subsection(1) of section 18, input tax credit shall not be available in
respect of the following,namely: —
(a)
motor vehicles and other conveyances except when they are used––
(i)
for making the following taxable supplies, namely: —
(A)
further supply of such vehicles or conveyances; or
(B)
transportation of passengers; or
(C)
imparting training on driving, flying, navigating such vehiclesor
conveyances;
(ii)
for transportation of goods;
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(5)
Notwithstanding anything contained in sub-section (1) of section 16 and
sub-section (1) of section 18, input tax credit shall not be available
inrespect of the following, namely: —
(a)
motor vehicles
(A) further supply of such motor vehicles or
(B) transportation of passengers; or
(C)
imparting training on driving, such motor vehicle;
(aa) vessels and aircraft except when they are used ––
(i) for making the following taxable supplies, namely: —
(A)
further supply of such vessels or aircraft; or
(B)
transportation of passengers; or
(C)
imparting training on navigating such vessels; or
(D)
imparting training on flying such aircraft;
(ii) for transportation of goods;
(ab) services of general insurance, servicing, repair and
maintenance in so far as they relate to motor vehicles, vessels or aircraft
referred to in clause (a)or clause (aa):
Provided that the input tax credit in respect of such services
shall be available —
(i) where the motor vehicles, vessels or aircraft referred to in
clause (a) or clause (aa) are used for the purposes specified therein;
(ii) where received by a taxable person engaged—
(I) in the manufacture of
such motor vehicles, vessels or aircraft; or
(II) in the supply of general insurance
services in respect of such motor vehicles, vessels or aircraft insured by
him;
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·
Now, ITC is
restricted only to the extent of motor vehicles for transportation of persons
having approved capacity of not more than 13 persons (including the driver) unless
used for specified purposes;
·
Reference
of ‘other conveyances’ while disallowing credit on motor vehicles has been
omitted. This amendment makes it clear
that ITC would now be available in respect of dumpers, work-trucks, fork-lift
trucks and other special purpose motor vehicles;
·
Separate entry is created for vessel and aircrafts in clause (aa) – No
credit shall be available on vessels and aircrafts except when used for
specified purposes under clause (aa);
·
It is
clarified that no ITC shall be available for services of general insurance,
servicing, repair and maintenance in so far as they relate to motor vehicles,
vessels and aircraft for which the credit is not available;
·
But, ITC on
services of general insurance, servicing, repair and maintenance on motor
vehicles, vessels or aircraftis allowed to manufacturer of such motor
vehicles, vessels or aircraft and to those engaged in supply of general
insurance services in respect of such motor vehicles, vessels or aircraft.
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Section 17(5)(b) – Other blocked credits
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(b) the following supply of goods or services or both—
(i) food and beverages, outdoor catering, beauty treatment,
health services,cosmetic and plastic surgery except where an inward supply of
goods or servicesor both of a particular category is used by a registered
person for making anoutward taxable supply of the same category of goods or
services or both or asan element of a taxable composite or mixed supply;
(ii)
membership of a club, health and fitness centre;
(iii)
rent-a-cab, life insurance and health insurance except where––
(A)
the Government notifies the services which are obligatory for anemployer to
provide to its employees under any law for the time being inforce; or
(B)
such inward supply of goods or services or both of a particularcategory is
used by a registered person for making an outward taxablesupply of the same
category of goods or services or both or as part of a
taxable
composite or mixed supply; and
(iv)
travel benefits extended to employees on vacation such as leave orhome travel
concession;
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(b) the
following supply of goods or services or both—
(i)food and
beverages, outdoor catering, beauty treatment, health services, cosmetic and
plastic surgery, leasing, renting or hiring of motor
vehicles, vessels or aircraft referred to in clause (a) or clause (aa) except
when used for the purposes specified therein, life insurance and health
insurance:
Provided
that the input tax credit in respect of such goods or services or both shall
be available where an inward supply of such goods or services or both is used
by a registered person for making an outward taxable supply of the same
category of goods or services or both or as an element of a taxable composite
or mixed supply;
(ii)
membership of a club, health and fitness centre; and
(iii)
travel benefits extended to employees on vacation such as leave or home
travel concession:
Provided
that the input tax credit in respect of such goods or servicesor both shall
be available, where it is obligatory for an employer to providethe same to
its employees under any law for the time being in force.
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ITC in respect of food and
beverages, health services, renting or hiring of motor vehicles, vessels and
aircraft, travel benefits to employees etc., can be availed where the
provision of such goods or services is obligatory for an employer to provide
to its employees under any law for time being in force.
Further ITC on renting or hiring of
motor vehicles, vessels or aircraft is allowed when they are used for
purposes specified in clause (a) or (aa).
What additionally could have been done:
·
Section 17(5) of the CGST Act must be pruned down further.
·
ITC in respect of construction of factory, offices must be allowed as
the same are foundation of any business for making outward supply of goods or
services and always required in the course or furtherance of business;
·
Word ‘free samples’ must be deleted from clause (h) of Section 17(5)
as distributing free samples is an inevitable practice of the trade to induce
clients to judge quality and buy the product of the company;
·
It may be clarified that supply of promotional items along with supply
of goods as a combo supply (undertaken as a part of business promotional
activity), shall not be covered under the ambit of ‘gift’ for reversal of ITC;
·
Allow ITC on ‘gifts’ when tax is paid on outward supply;
·
No denial of ITC on goods confiscated or detained.
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Section 20(c) - Manner of distribution of credit by ISD
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(c)
the term ‘‘turnover’’, in relation to any registered person engaged inthe
supply of taxable goods as well as goods not taxable under this Act, meansthe
value of turnover, reduced by the amount of any duty or tax levied underentry
84 of List I of the Seventh Schedule to the Constitution and entries 51 and54
of List II of the said Schedule.
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(c) the
term ‘‘turnover’’, in relation to any registered person engaged in the supply of taxable goods as well as goods
not taxable under this Act, means the value of turnover, reduced by the
amount of any duty or tax levied under
|
This amendment excludes the amount
of tax levied under entry 92A of List I from the value of turnover for the
purposes of distribution of credit by ISD. The same was inadvertently left
out from clause (c) of Explanation to Section 20.
Entry 92A of List I covers taxes on
the sale or purchase of goods other than newspapers, where such sale or
purchase takes place in the course of inter-State trade or commerce.
|
Section 22(1) second proviso – Persons liable for registration
|
||
22
(1) Every supplier shall be liable to be registered under this Act in the
State or Union territory, other than special category States, from where he
makes a taxable supply of goods or services or both, if his aggregate
turnover in a financial year exceeds twenty lakh rupees:
Provided
that where such person makes taxable supplies of goods or services or both
from any of the special category States, he shall be liable to be registered
if his aggregate turnover in a financial year exceeds ten lakh rupees.
|
22
(1) Every supplier shall be liable to be registered under this Act in the
State or Union territory, other than special category States, from where he
makes a taxable supply of goods or services or both, if his aggregate
turnover in a financial year exceeds twenty lakh rupees:
Provided
that where such person makes taxable supplies of goods or services or both
from any of the special category States, he shall be liable to be registered
if his aggregate turnover in a financial year exceeds ten lakh rupees.
Provided further that the
Government may, at the request of a special category State and on the
recommendations of the Council, enhance the aggregate turnover referred to in
the first proviso from ten lakh rupees to such amount, not exceeding twenty
lakh rupees and subject to such conditions and limitations, asmay be so
notified.
|
Proviso is inserted under Section 22(1)so
as to enable government toenhance the threshold limit of registration in
special category states from ten lakh rupees to maximum twenty lakh rupees
|
Section 22 Explanation (iii) - Persons liable for registration
|
||
Explanation
(iii)to section 22the expression “special category States” shall mean the
States as specifiedin sub-clause (g) of clause (4) of article 279A of the Constitution
except the State of Jammu and Kashmir.
|
Explanation
(iii) to section 22 the expression “special category States” shall mean the
States as specified in sub-clause (g) of clause (4) of article 279A of the
Constitution except the State of Jammu and Kashmir and
States of Arunachal Pradesh, Assam, Himachal Pradesh, Meghalaya, Sikkim and
Uttarakhand.
|
The threshold turnover for
registration in special category States of Arunachal Pradesh, Assam, Himachal
Pradesh, Meghalaya, Sikkim and Uttarakhand is increased from ten lakh rupees
totwenty lakh rupees.
|
Section 24 – Compulsory registration in certain cases
|
||
(x)
every electronic commerce operator.
|
(x) every
electronic commerce operator who is required to
collect tax at source under section 52.
|
|
Section 25(1) – Procedure for registration
|
||
25 (1)
Every person who is liable to be registered under section 22 or section 24
shallapply for registration in every such State or Union territory in which
he is so liable withinthirty days from the date on which he becomes liable to
registration, in such manner andsubject to such conditions as may be
prescribed:
Provided
that a casual taxable person or a non-resident taxable person shall apply
forregistration at least five days prior to the commencement of business.
Explanation.
—Every person who makes a supply from the territorial waters of Indiashall
obtain registration in the coastal State or Union territory where the nearest
point of theappropriate baseline is located.
|
25 (1)
Every person who is liable to be registered under section 22 or section 24
shall apply for registration in every such State or Union territory in which
he is so liable within thirty days from the date on which he becomes liable
to registration, in such manner and subject to such conditions as may be
prescribed:
Provided
that a casual taxable person or a non-resident taxable person shall apply for
registration at least five days prior to the commencement of business.
Provided
further that a person having a unit, as defined in the Special Economic Zones
Act, 2005, in a Special Economic Zone or being a Special Economic Zone
developer shall have to apply for a separate registration, as distinct from
his place of business located outside the Special Economic Zone in the same
State or Union territory.
Explanation.
—Every person who makes a supply from the territorial waters of India shall
obtain registration in the coastal State or Union territory where the nearest
point of the appropriate baseline is located.
|
|
Section 25(2) – Procedure for registration
|
||
25 (2) A person seeking registration under
this Act shall be granted a single registrationin a State or Union territory:
Provided that a person having multiple
business verticals in a State or Union territorymay be granted a separate
registration for each business vertical, subject to such conditionsas may be
prescribed.
|
25 (2) A person seeking registration under this Act
shall be granted a single registration in a State or Union territory:
Provided
that a person having multiple
|
|
Section 29(1) – Cancellation or
Suspensionof Registration
|
||
29 (1) The
proper officer may, either on his own motion or on an application filed bythe
registered person or by his legal heirs, in case of death of such person,
cancel the registration, in such manner and within such period as may be
prescribed, having regard tothe circumstances where, ––
(a) ..
(b) ..
(c) the
taxable person, other than the person registered under sub-section (3)
ofsection 25, is no longer liable to be registered under section 22 or
section 24.
|
29 (1) The
proper officer may, either on his own motion or on an application filed by
the registered person or by his legal heirs, in case of death of such person,
cancel the registration, in such manner and within such period as may be
prescribed, having regard to the circumstances where-
(a) ..
(b) ..
(c) the
taxable person, other than the person registered under subsection (3) of
section 25, is no longer liable to be registered under section 22 or section
24.
Provided
that during pendency of the proceedings relating to cancellationof
registration filed by the registered person, the registration may be
suspendedfor such period and in such manner as may be prescribed.
|
|
Similar changes are also made in sub-section (2)after the
proviso of Section 29(2)
|
||
Section 34 – Debit and Credit Notes
|
||
34 (1)
Where a tax invoice has been issued for supply of any goods or services or
both and the taxable value or tax charged in that tax invoice is found to
exceed the taxable value or tax payable in respect of such supply, or where
the goods supplied are returned by the recipient, or where goods or services
or both supplied are found to be deficient, the registered person, who has
supplied such goods or services or both, may issue to the recipient a credit
note containing such particulars as may be prescribed.
(2) …
(3) Where a
tax invoice has been issued for supply of any goods or services or bothand
the taxable value or tax charged in that tax invoice is found to be less than
the taxablevalue or tax payable in respect of such supply, the registered
person, who has supplied suchgoods or services or both, shall issue to the
recipient a debit note containing such particularsas may be prescribed.
|
34(1) Where
(2) …
(3) Where
|
|
Section 35(5) – Accounts and other records
|
||
35 (5)
Every registered person whose turnover during a financial year exceeds
theprescribed limit shall get his accounts audited by a chartered accountant
or a cost accountantand shall submit a copy of the audited annual accounts,
the reconciliation statement undersub-section (2) of section 44 and such
other documents in such form and manner as may beprescribed.
|
35 (5) Every
registered person whose turnover during a financial year exceeds the
prescribed limit shall get his accounts audited by a chartered accountant or
a cost accountant and shall submit a copy of the audited annual accounts, the
reconciliation statement under sub-section (2) of section 44 and such other
documents in such form and manner as may be prescribed:
Provided
that nothing contained in this sub-section shall apply to anydepartment of
the Central Government or a State Government or a local authority,whose books
of account are subject to audit by the Comptroller and Auditor-Generalof
India or an auditor appointed for auditing the accounts of local authorities
underany law for the time being in force.
|
|
Section 39 (1)- Furnishing of returns
|
||
39
(1) Every registered person, other than an Input Service Distributor or
anon-resident taxable person or a person paying tax under the provisions of
section 10 orsection 51 or section 52 shall, for every calendar month or part
thereof, furnish, in such formand manner as may be prescribed, a return,
electronically, of inward and outward supplies ofgoods or services or both,
input tax credit availed, tax payable, tax paid and such otherparticulars as
may be prescribed, on or before the twentieth day of the month succeedingsuch
calendar month or part thereof.
|
39 (1) Every
registered person, other than an Input Service Distributor or a non-resident
taxable person or a person paying tax under the provisions of section 10 or
section 51 or section 52 shall, for every calendar month or part thereof,
furnish,
Provided
that the Government may, on the recommendations of the Council, notify
certain classes of registered persons who shall furnish return for every
quarter or part thereof, subject to such conditions and safeguards as may be
specified therein.
|
|
Section 39 (7)- Furnishing of returns
|
||
39
(7) Every registered person, who is required to furnish a return under
sub-section (1)or sub-section (2) or sub-section (3) or sub-section (5),
shall pay to the Government the taxdue as per such return not later than the
last date on which he is required to furnish such return.
|
39 (7) Every
registered person, who is required to furnish a return under sub-section (1)
or sub-section (2) or sub-section (3) or sub-section (5), shall pay to the
Government the tax due as per such return not later than the last date on
which he is required to furnish such return.
Provided
that the Government may, on the recommendations of the Council, notify
certain classes of registered persons who shall pay to the Government the tax
due or part thereof as per the return on or before the last date on which he
is required to furnish such return, subject to such conditions and safeguards
as may be specified therein.
|
|
Section 39(9)- Furnishing of returns
|
||
39 (9)
Subject to the provisions of sections 37 and 38, if any registered
personafter furnishing a return under sub-section (1) or sub-section (2) or
sub-section (3) orsub-section (4) or sub-section (5) discovers any omission
or incorrect particulars therein,other than as a result of scrutiny, audit,
inspection or enforcement activity by the tax authorities,he shall rectify
such omission or incorrect particulars in the return to be furnished for
themonth or quarter during which such omission or incorrect particulars are
noticed, subject topayment of interest under this Act:
Provided
that no such rectification of any omission or incorrect particulars shall
beallowed after the due date for furnishing of return for the month of
September or secondquarter following the end of the financial year, or the
actual date of furnishing of relevantannual return, whichever is earlier.
|
39 (9) Subject
to the provisions of sections 37 and 38, if any registered person after
furnishing a return under sub-section (1) or sub-section (2) or sub-section
(3) or sub-section (4) or sub-section (5) discovers any omission or incorrect
particulars therein, other than as a result of scrutiny, audit, inspection or
enforcement activity by the tax authorities, he shall rectify such omission
or incorrect particulars
Provided
that no such rectification of any omission or incorrect particulars shall be
allowed after the due date for furnishing of return for the month of
September or second quarter following
|
|
Section 43A – Procedure for furnishing return and
availing input tax credit
|
||||
--------
|
43 A: Procedure for furnishing return and
availing input tax credit
(1) Notwithstanding anything contained in sub-section (2) of
section 16, section 37 or section 38, every registered person shall in the
returns furnished under sub-section (1) of section 39 verify, validate,
modify or delete the details of supplies furnished by the suppliers.
(2) Notwithstanding anything contained in section 41, section 42
or section 43, the procedure for availing of input tax credit by the
recipient and verification thereof shall be such as may be prescribed.
(3) The procedure for furnishing the details of outward supplies
by the supplier on the common portal, for the purposes of availing input tax
credit by the recipient shall be such as may be prescribed.
(4) The procedure for availing input tax credit in respect of
outward supplies not furnished under sub-section (3) shall be such as may be
prescribed, and such procedure may include the maximum amount of the input
tax credit which can be so availed, not exceeding twenty per cent. of the
input tax credit available, on the basis of details furnished by the
suppliers under the said sub-section.
(5) The amount of tax specified in the outward supplies for which
the details have been furnished by the supplier under sub-section (3) shall
be deemed to be the tax payable by him under the provisions of the Act.
(6) The supplier and the recipient of a supply shall be jointly
and severally liable to pay tax or to pay the input tax credit availed, as
the case may be, in relation to outward supplies for which the details have
been furnished under sub-section (3) or sub-section (4) but return thereof
has not been furnished.
(7) For the purposes of sub-section (6), the recovery shall be
made in such manner as may be prescribed and such procedure may provide for
non-recovery of an amount of tax or input tax credit wrongly availed not
exceeding one thousand rupees.
(8) The procedure, safeguards and threshold of the tax amount in
relation to outward supplies, the details of which can be furnished under
sub-section (3) by a registered person, —
(i) within six months of taking registration;
(ii) who has defaulted in payment of tax and where such default
has continued for more than two months from the due date of payment of such
defaulted amount
shall be such as may be prescribed.”.
|
This new Section 43A provides for
prescribing the procedure for furnishing return and availing ITC.
As per new provisions, the tax on
details of outward supplies declared by the supplier will be deemed to be
payable by the supplier.
However, the supplier and recipient
have been made jointly and severally liable to pay tax for details
furnished/not furnished by the supplier in respect of which the return has
not been furnished.
|
||
Section 48(2) – GST
Practitioner
|
||||
48 (2)
A registered person may authorise an approved goods and services tax
practitionerto furnish the details of outward supplies under section 37, the
details of inward suppliesunder section 38 and the return under section 39 or
section 44 or section 45 in such manneras may be prescribed.
|
48 (2)
A registered person may authorise an approved goods and services tax
practitioner to furnish the details of outward supplies under section 37, the
details of inward supplies under section 38 and the return under section 39
or section 44 or section 45, and to perform such
other functions in such manner as may be prescribed.
|
This amendment allows the GST
practitioner to perform other functions such as, filing refund claim, filing
application for cancellation of registration etc., apart from furnishing the
details of outward and inward supplies and various returns on behalf of a
registered person.
|
||
Sec 49 (2) – Payment of Tax
|
||||
49 (2) The input tax credit as self-assessed
in the return of a registered person shall becredited to his electronic
credit ledger, in accordance with section 41, to be maintained in
such manner as may be prescribed.
|
49 (2) The input tax credit as self-assessed
in the return of a registered person shall becredited to his electronic
credit ledger, in accordance with
|
|||
Sec 49 (5)(c) & (d) – Payment of Tax
|
||||
49 (5) The
amount of input tax credit available in the electronic credit ledger of the
registeredperson on account of––
(a)….
(b)….
(c) the
State tax shall first be utilised towards payment of State tax and theamount
remaining, if any, may be utilised towards payment of integrated tax;
(d) the Union
territory tax shall first be utilised towards payment of Union territorytax
and the amount remaining, if any, may be utilised towards payment of
integrated tax.
|
49 (5) The
amount of input tax credit available in the electronic credit ledger of the
registered person on account of ––
(a)….
(b)….
(c) the
State tax shall first be utilized towards payment of State tax and the amount
remaining, if any, may be utilized towards payment of integrated tax;
Provided
that the input tax credit on account of State tax shall be utilised towards
payment of integrated tax only where the balance of theinput tax credit on
account of central tax is not available for payment of integrated tax;”;
(d) the
Union territory tax shall first be utilized towards payment of Union
territory tax and the amount remaining, if any, may be utilized towards
payment of integrated tax;
Provided
that the input tax credit on account of Union territory tax shall be utilised
towards payment of integrated tax only where the balance of the input tax
credit on account of central tax is not available for payment of integrated
tax.
|
Clauses (c) and (d) to Section 49(5)
are amended to provide that the credit of SGST/ UTGST can be utilized for payment of IGST only when the balance
of the input tax credit on account of CGST is not available for payment of IGST.
|
||
Section 49A - Utilisation of input tax credit subject to certain
conditions
|
||||
------
|
49A
- Notwithstanding anything contained in section 49, the input tax credit on
account of central tax, State tax or Union territory tax shall be utilised
towards payment of integrated tax, central tax, State tax or Union territory
tax, as the case may be, only after the input tax credit available on account
of integrated tax has first been utilised fully towards such payment.
|
A taxpayer would be able to utilise
credit on account of CGST,SGST/UTGST, only after exhausting all the credit on
account of IGST available to him. This
is being done to minimise fund settlement on account of IGST.
Therefore, the manner of utilisation
of GST credits is as follows:
Credit of IGST to be utilised first
for liability of: IGST – CGST - SGST
Then,
- Credit of CGST to be utilised for liability of: CGST/ IGST (If
any)
- Credit of SGST to be utilised for liability of: SGST/ IGST (if
any)
|
||
Section 49B - Order of utilisation of input tax credit
|
||||
-------
|
49B.
Notwithstanding anything contained in this Chapter and subject to
theprovisions of clause (e) and clause (f) of sub-section (5) of section 49,
the Governmentmay, on the recommendations of the Council, prescribe the order
and manner ofutilisation of the input tax credit on account of integrated
tax, central tax, State tax orUnion territory tax, as the case may be,
towards payment of any such tax.
|
This Section provides an enabling
power for the Government to prescribe any specific order of utilization of ITC
for payment oftaxes.
This provision is subject to clause
(e) and (f) of Section 49(5) i.e. CGST and SGST/UTGST cannot be cross
utilized.
|
||
Section 52(9) – Collection of tax at source
|
||||
52 (9) Where the details of outward supplies
furnished by the operator undersub-section (4) do not match with the
corresponding details furnished by the supplier undersection 37, the
discrepancy shall be communicated to both persons in such manner andwithin
such time as may be prescribed.
|
(9) Where
the details of outward supplies furnished by the operator under sub-section
(4) do not match with the corresponding details furnished by the supplier
under
|
Amendment is made to include
reference of returns filed under Section 39 by the supplier.
|
||
Section 54(8)–Refunds
|
||||
54 (8)
Notwithstanding anything contained in sub-section (5), the refundable
amountshall, instead of being credited to the Fund, be paid to the applicant,
if such amount isrelatable to—
(a) refund
of tax paid on zero-rated supplies of goods or services or both or oninputs
or input services used in making such zero-rated supplies;
(b) ………..
|
54 (8)
Notwithstanding anything contained in sub-section (5), the refundable amount
shall, instead of being credited to the Fund, be paid to the applicant, if
such amount is relatable to—
(a) refund
of tax paid on
(b) ………..
|
This seeks to amend Section 54
relating to "Refund of tax", to provide that the principle of
unjust enrichment will apply in case of a refund claim arising out of
supplies of goods or services or both made to a SEZ developer or unit.
|
||
Section 54 Explanation (2)(c) - Relevant date for filing refunds
in case of export of services
|
||||
(c) in the
case of services exported out of India where a refund of tax paidis available
in respect of services themselves or, as the case may be, the inputsor input
services used in such services, the date of––
(i) receipt
of payment in convertible foreign exchange, where thesupply of services had
been completed prior to the receipt of such payment;or
(ii) ………….
|
(c) in the
case of services exported out of India where a refund of tax paid is
available in respect of services themselves or, as the case may be, the
inputs or input services used in such services, the date of––
(i) receipt
of payment in convertible foreign exchange or in
Indian rupees wherever permitted by the Reserve Bank of India, where
the supply of services had been completed prior to the receipt of such
payment; or
(ii) ………….
|
This amendment allows receipt of
payment in Indian rupees, where permitted, by the RBI in case of export of
services.
In this respect, the provisions of Section
2(6)(iv) of the IGST Act are also being amended to provide that services
shall qualify as exports even if the payment for the services supplied is
received in Indian rupees as per RBI regulations.
|
||
Section 54 Explanation (2)(e) -Relevant date for filing refunds in case of
unutilized ITC
|
||||
Explanation.
-For the purposes of this section, -
(2)
“relevant date” means-
…………….
(e)
in the case of refund of unutilised input tax credit undersub-section (3),
the end of the financial year in which such claim for refundarises.
|
Explanation.
-For the purposes of this section, -
(2)
“relevant date” means-
…………….
(e)
in the case of refund of unutilised input tax credit under clause (ii) of first proviso to sub-section (3), the
|
This seeks to prescribe that the
relevant date in the case of refund of unutilised ITC arising out of inverted
duty structure, shall be the due date for furnishing of return under section
39 for the period in which such claim for refund arises.
For all other cases of unutilized
ITC, relevant date shall be the end of any tax period as mentioned in Section
54(3) of the CGST Act.
|
||
Section 79(4)– Recovery of tax
|
||||
79 (4) Where the amount recovered under sub-section (3) is less
than the amount due tothe Central Government and State Government, the amount
to be credited to the account ofthe respective Governmentsshall be in proportion
to theamount due to each suchGovernment.
|
79 (4) Where the amount recovered under sub-section (3) is less
than the amount due tothe Central Government and State Government, the amount
to be credited to the account ofthe respective Governmentsshall be in
proportion to theamount due to each suchGovernment.
Explanation. ––For the purposes of this section, the word person
shall include“distinct persons” as referred to in sub-section (4) or, as the
case may be,sub-section (5) of section 25.
|
This amendment provides that recovery
may be made from distinct persons present in different States / UTs in order
to ensure speedy recovery from other establishments of the registered
person.
This amendment is anti-industry and
will be retrograde in nature.
Operation of units in other states should not be affected if there are
disputes in one state and a consequent recovery. This should have been dropped
in the interest of industry.
|
||
Section 107(6) & 112(8) – Appeal to Appellate Authority and
Appellate Tribunal
|
||||
107
(6) No appeal shall be filed under sub-section (1), unless the appellant has
paid—
(a)
in full, such part of the amount of tax, interest, fine, fee and penalty
arisingfrom the impugned order, as is admitted by him; and
(b)
a sum equal to ten per cent. of the remaining amount of tax in dispute
arisingfrom the said order, in relation to which the appeal has been filed.
|
107
(6) No appeal shall be filed under sub-section (1), unless the appellant has
paid—
(a)
in full, such part of the amount of tax, interest, fine, fee and penalty
arisingfrom the impugned order, as is admitted by him; and
(b) a sum
equal to ten per cent. of the remaining amount of tax in dispute arisingfrom
the said ordersubject to a maximum of twenty-five
crore rupees, in relation to which the appeal has been filed.
|
This amendment put a ceiling on the
limit of the amount to be deposited before filing an appeal to the appellate
authorityu/s 107 (6) which is 10% of the disputed tax amount subject to
maximum limit of INR 25 crores. Further, the maximum amount to be deposited
to file appeal from the appellate authority [u/s 112(8)] to appellate
tribunal is 20% of the disputed tax amount along with the amount deposited
u/s 107(6) subject to maximum of INR 50 crores
What additionallycould have been done:
Keeping such high pre-deposit amount
of 10%/20% with maximum ceiling as high as INR50 crores/ 100 crores [CGST + SGST/UTGST]
will cause undue hardship on innocent assesses having genuine case and not
easing business for SME/ MSME Sectors.
Pre-deposit amount under GST also
should be 7.5% at first level of appeal and 2.5% at second level, totalling
together 10% of disputed tax amount subject to maximum of INR 10 Crores, as
was in Service tax and Excise era.
|
||
112
(8) No appeal shall be filed under sub-section (1), unless the appellant has
paid––
(a)
in full, such part of the amount of tax, interest, fine, fee and penalty
arisingfrom the impugned order, as is admitted by him, and
(b)
a sum equal to twenty per cent. of the remaining amount of tax in dispute,
inaddition to the amount paid under sub-section (6) of section 107, arising
from the saidorder, in relation to which the appeal has been filed.
|
112
(8) No appeal shall be filed under sub-section (1), unless the appellant has
paid––
(a)
in full, such part of the amount of tax, interest, fine, fee and penalty
arisingfrom the impugned order, as is admitted by him, and
(b) a sum
equal to twenty per cent. of the remaining amount of tax in dispute,
inaddition to the amount paid under sub-section (6) of section 107, arising
from the saidordersubject to a maximum of twenty-five
crore rupees, in relation to which the appeal has been filed.
|
|||
Section 129(6) – Detention, seizure and release of goods and
conveyances in transit
|
||||
129
(6) Where the person transporting any goods, or the owner of the goods fails
to pay
the
amount of tax and penalty as provided in sub-section (1) within seven days of
such detention or seizure, further proceedings shall be initiated in
accordance with the provisions
of
section 130:
Provided
that where the detained or seized goods are perishable or hazardous in nature
or are likely to depreciate in value with passage of time, the said period of
seven days may be reduced by the proper officer.
|
129 (6) Where
the person transporting any goods, or the owner of the goods fails to pay the
amount of tax and penalty as provided in sub-section (1) within
Provided
that where the detained or seized goods are perishable or hazardous in nature
or are likely to depreciate in value with passage of time, the said period of
|
It seeks to increase the time limit
before which proceedings under Section 130 can be initiated from seven to
fourteen days.
What additionallycould have been done:
· Section
129 must be amended to restrict levying of penalties only in cases where there
is intent to evade taxes;
· Further,
suitable provision must be incorporated which allows releasing of goods
without levying penalty once the proof of payment of appropriate tax is shown
or a mere technical breach is shown;
· E-Way
Bill compliance must be made little easy for small taxpayers upto specified
turnover by prescribing simple form with lesser details.
· Alternatively,
threshold of consignment value exceeding INR 50,000/- requiring generating of
E-Way Bill may be increased to INR 2 Lakh per consignment basis for small
taxpayers.
|
||
Section 140(1) – Transitional arrangement of Input Tax Credit
|
||||
(1) A
registered person, other than a person opting to pay tax under section
10,shall be entitled to take, in his electronic credit ledger, the amount of
CENVAT credit carriedforward in the return relating to the period ending with
the day immediately preceding theappointed day, furnished by him under the
existing law in such manner as may be prescribed….”
“……Explanation
1.— For the purposes of sub-sections (3), (4) and (6), the expression
“eligible duties” means––
(i)…….
(ii)……
(iii)….
(iv) the
additional duty of excise leviable under section 3 of the AdditionalDuties of
Excise (Textile and Textile Articles) Act, 1978.
“….
Explanation 2.—For the purposes of sub-section (5), the expression “eligible
dutiesand taxes” means––
(i)……
(ii)….
(iii)….
(iv) the
additional duty of excise leviable under section 3 of the AdditionalDuties of
Excise (Textile and Textile Articles) Act, 1978.
(v)….”
|
(1)
A registered person, other than a
person opting to pay tax under section
10, shall be entitled to take, in his electronic credit ledger, the amount of
CENVAT credit of eligible duties carried
forward in the return relating to the period ending with the day immediately
preceding the appointed day,
furnished by him under the existing law in such manner as may be
prescribed……”
“…. Explanation 1.—For the purposes of sub-sections (1), (3), (4) and (6), the expression “eligible
duties”means––
(i)…
(ii) …
(iii)…
(iv)
(v)…”
“….
Explanation 2.—For the purposes of sub-sections (1)
and(5), the expression “eligible duties and taxes”means––
(i)…
(ii)
…
(iii)…
(iv)
(v) … ”
Explanation 3.—For removal of doubts, it is hereby clarified that
the expression “eligible duties and taxes” excludes any cess which has not
been specified in Explanation 1 or Explanation 2 and any cess which is
collected as additional duty of customs under sub-section (1) of section 3 of
the Customs Tariff Act, 1975.
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Retrospective application w.e.f. 01.07.2017
This clarifies that only
transitional credit of eligible duties can be carried forward in the return
and not all credits. Further, eligible duties do not include the additional
duty of excise leviable under Section 3 of the Additional Duties of Excise
(Textile and Textile Articles) Act, 1978.
Furthermore, explanation is inserted
to clarify that the expression “eligible duties and taxes” excludes any cess
which has not been specified in Explanation 1 or Explanation 2 above and any
cess which is collected as additional duty of customs under sub-section (1)
of section 3 of the Customs Tariff Act, 1975.
What additionallycould have been done:
Companies which have availed credit
of the cesses (as law was not clear) should be allowed time to reverse the
credit within 30 days from the date of the enactment without interest or
penalty implication.
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Section 143(1)(b) – Job work procedure
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143
(1) A registered person (hereafter in this section referred to as the
“principal”)may under intimation and subject to such conditions as may be
prescribed, send any inputsor capital goods, without payment of tax, to a job
worker for job work and from theresubsequently send to another job worker and
likewise, and shall, ––
(a)
bring back inputs, after completion of job work or otherwise, or capital
goods,other than moulds and dies, jigs and fixtures, or tools, within one
year and three years,respectively, of their being sent out, to any of his
place of business, without paymentof tax;
(b)
supply such inputs, after completion of job work or otherwise, or
capitalgoods, other than moulds and dies, jigs and fixtures, or tools, within
one year and threeyears, respectively, of their being sent out from the place
of business of a job workeron payment of tax within India, or with or without
payment of tax for export, as the casemay be:
Provided
that the principal shall not supply the goods from the place of businessof a
job worker in accordance with the provisions of this clause unless the said
principaldeclares the place of business of the job worker as his additional
place of businessexcept in a case—
(i)
where the job worker is registered under section 25; or
(ii)
where the principal is engaged in the supply of such goods as may benotified
by the Commissioner.
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143
(1) A registered person (hereafter in this section referred to as the
“principal”)may under intimation and subject to such conditions as may be
prescribed, send any inputsor capital goods, without payment of tax, to a job
worker for job work and from theresubsequently send to another job worker and
likewise, and shall, ––
(a)
bring back inputs, after completion of job work or otherwise, or capital
goods,other than moulds and dies, jigs and fixtures, or tools, within one
year and three years,respectively, of their being sent out, to any of his
place of business, without paymentof tax;
(b)
supply such inputs, after completion of job work or otherwise, or capitalgoods,
other than moulds and dies, jigs and fixtures, or tools, within one year and
threeyears, respectively, of their being sent out from the place of business
of a job workeron payment of tax within India, or with or without payment of
tax for export, as the casemay be:
Provided
that the principal shall not supply the goods from the place of businessof a
job worker in accordance with the provisions of this clause unless the said
principaldeclares the place of business of the job worker as his additional
place of businessexcept in a case—
(i)
where the job worker is registered under section 25; or
(ii) where
the principal is engaged in the supply of such goods as may benotified by the
Commissioner.
Provided
further that the period of one year and three years may, on sufficient cause
being shown, be extended by the Commissioner for a further period not
exceeding one year and two years respectively.
|
In terms of Section 143 of the CGST
Act, a registered person (principal) is allowed to send inputs or capital
goods to a job worker for job work without payment of tax subject to the
conditions inter-alia, that the inputs and capital goods are brought back
within a period of one year and three years respectively.
Now, a proviso is inserted in Section
143 to provide that the period of one year or three years may, on sufficient
cause being shown, be extended by the Commissioner for a further period not
exceeding one year and two years respectively.
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Schedule I – Supply made without consideration
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4.
Import of services by a taxable person from a related person or from any of
his other
establishments
outside India, in the course or furtherance of business
|
4. Import
of services by a
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Import of services by entities which
are not registered under GST (say, they are only making exempted supplies)
but are otherwise engaged in business activities shall be liable to tax when
received from a related person or from any of their establishments outside
India.
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Schedule II – Activities or Transactions
to be treated as supply of goods or supply of services
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------------
|
Change in heading
|
Change in heading retrospectively w.e.f. 01.07.2017
|
||
Schedule III –Activities or transactions which shall be treated
neither as supply of goods nor supply of services
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6.
Actionable claims, other than lottery, betting and gambling.
Explanation.
— For the purposes of paragraph 2, the term "court" includes
District Court, High Court and Supreme Court.
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6.
Actionable claims, other than lottery, betting and gambling.
7.
Supply of goods from a place in the non-taxable territory to anotherplace in
the non-taxable territory without such goods entering into India.
8.
(a) Supply of warehoused goods to any person before clearance forhome
consumption;
(b)
Supply of goods by the consignee to any other person, by endorsementof
documents of title to the goods, after the goods have been dispatched fromthe
port of origin located outside India but before clearance for homeConsumption.
Explanation.1 — For the purposes of paragraph 2, the term
"court" includes District Court, High Court and Supreme Court.
Explanation
2. ––For the purposes of paragraph 8, theexpression“warehoused goods” shall
have the same meaning as assigned to it in theCustoms Act, 1962.
|
The scope of Schedule III isexpanded
to include merchant trading, supply of goods in the course of High Seas Sale
and Sale of imported warehoused goods. Thus, these transactions shall nether
be treated a supply of goods nor supply of services.
Further, there shall be no reversal
of common credit on account of these supplies.
What additionallycould have been done:
·
Amendments in Schedule III should have been made effective
retrospectively from 01.07.2017;
·
Relief in the form of possible refunds should be granted for the tax
already paid earlier on sale of goods from custom bonded warehouse;
·
Inter-Company supply of services provided by Head office to branch
office/ representative office of the same legal entity having a common PAN
located in the taxable territory or vice versa should be included in Schedule
III so that the same does not qualify as supply of services liable to GST,
like centralized functions of accounting, legal, HR etc., carried out by HO;
·
Duty credit scrips viz. MEIS/ SEIS, issued on export of goods/
services are presently treated as exempted goods and therefore are subject to
reversal of credit provisions. As an encouragement to exporters, these Duty
credit scrips should be included here as neither supply of goods nor services.
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||
Synopsis of the IGST Amendment Act, 2018
Provisions as per pre-amendment IGST Act
|
Provisions of amended IGST Act w.e.f. 01.02.2019
|
Effect of amendment along with analysis as to comparison
|
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Section 2(6) – Definition of ‘Export of services’
|
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2 (6) “export of
services” means the supply of any service when, ––
(i) the supplier of
service is located in India;
(ii) the recipient of
service is located outside India;
(iii) the place of
supply of service is outside India;
(iv) the payment for
such service has been received by the supplier of service in convertible
foreign exchange; and
(v) the supplier of
service and the recipient of service are not merely establishments of a
distinct person in accordance with Explanation 1 in section 8.
|
(6) “export of services”
means the supply of any service when, ––
(i) the supplier of
service is located in India;
(ii) the recipient of
service is located outside India;
(iii) the place of
supply of service is outside India;
(iv) the payment for
such service has been received by the supplier of service in convertible
foreign exchange or in Indian Rupees wherever
permitted by the Reserve Bank of India; and
(v) the supplier of
service and the recipient of service are not merely establishments of a
distinct person in accordance with Explanation 1 in section 8.
|
This amendment allows receipt of
payment in Indian rupees in case of export of services wherever permitted by
the RBI. This is a taxpayer-friendly
measure.
|
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Explanation to Section 2(16) – Meaning of ‘governmental
authority’
|
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2 (16) “non-taxable
online recipient” means any Government, local authority,governmental
authority, an individual or any other person not registered and
receivingonline information and database access or retrieval services in
relation to any purposeother than commerce, industry or any other business or
profession, located in taxableterritory.
Explanation. –– For the
purposes of this clause, the expression “governmental authority” means an
authority or a board or any other body, ––
(i) set up by an Act of
Parliament or a State Legislature; or
(ii) established by any
Government, with ninety per cent. or more participation by way of equity or
control, to carry out any function entrusted to a municipality under article
243W of the Constitution;.
|
2 (16) “non-taxable
online recipient” means any Government, local authority,governmental
authority, an individual or any other person not registered and
receivingonline information and database access or retrieval services in relation
to any purposeother than commerce, industry or any other business or
profession, located in taxableterritory.
Explanation. –– For the
purposes of this clause, the expression ‘governmental authority’ means “an
authority or a board or any other body, -
(i) set up by an Act of
Parliament or a State Legislature; or
(ii) established by any
Government, with ninety per cent. or more participation by way of equity or
control, to carry out any function entrusted to aPanchayat under article 243G
or municipality under article 243W of the Constitution.
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The reference to Panchayat under
Article 243G is sought to be added in the definition ofGovernmental
authority.
|
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Section 5(4) – Reverse charge on procurements made from
unregistered suppliers
|
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(4) The integrated tax in respect of
the supply of taxable goods or services or both by a supplier, who is not
registered, to a registered person shall be paid by such person on reverse
charge basis as the recipient and all the provisions of this Act shall apply to
such recipient as if he is the person liable for paying the tax in relation
to the supply of such goods or services or both.
|
(4)
The Government may, on the recommendations of the Council, by notification,
specify a class of registered persons who shall, in respect of supply of
specified categories of goods or services or both received from an
unregistered supplier, pay the tax on reverse charge basis as the recipient
of such supply of goods or services or both, and all the provisions of this Act
shall apply to such recipient as if he is the person liable for paying the
tax in relation to such supply of goods or services or both.
|
This
omits Section 5(4) of the IGST Act and instead, grant an enabling power for
the Govt. to notify a class of registered persons who would be liable to pay
tax on reverse charge basis in case of receipt of specified categories of
goods or services or both from an unregistered supplier.
The
details of such specified persons and specified goods/services are to be
notified in future.
What additionally could have been done:
Operation
of Section 5(4) in its present form, is not conducive as the registered
recipient requires to raise self-invoice, capturing individual HSN/ SAC codes
for procurement of specified goods or services, which is operationally not
easing business and should be done away completely.
|
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Explanation to Section 8 – Establishments of distinct persons
|
|||||
Explanation
1. –– For the purposes of this Act, where a person has, ––
(i) an
establishment in India and any other establishment outside India;
(ii) an
establishment in a State or Union territory and any other establishment
outside that State or Union territory; or
(iii) an
establishment in a State or Union territory and any other establishment being
a business vertical registered within that State or Union territory, then
such establishments shall be treated as establishments of distinct persons.
|
Explanation
1. –– For the purposes of this Act, where a person has, ––
(i) an
establishment in India and any other establishment outside India;
(ii) an
establishment in a State or Union territory and any other establishment
outside that State or Union territory; or
(iii) an
establishment in a State or Union territory and any other establishment
|
Amendment is made to align with the
CGST Amendment Act, 2018 which allows more than registration in a state or
union territory by removing the requirement of having multiple business
verticals.
|
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Section 12(8) – Place of supply of domestic services of
transportation of goods
|
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12 (8) The place of supply of services by way of transportation
of goods, including by mail or courier to, ––
(a) a registered person shall be the location of such person;
(b) a person other than a registered person, shall be the
location at which such
goods are handed over for their transportation.
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12 (8) The place of supply of services by way of transportation
of goods, including by mail or courier to, –
(a) a registered person shall be the location of such person;
(b) a person other than a registered person, shall be the
location at which such goods are handed over for their transportation:
Provided
that where the transportation of goods is to a place outside India, the place
of supply shall be the place of destination of such goods.
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In order to provide a level playing
field to the domestic transportation companies and promote export of goods,
this proviso provides that transportation of goods from a place in India to a
place outside India by a transporter located in India would not be chargeable
to GST, as place of supply will be outside India.
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Section 13(3) – Place of supply of performance-based services
|
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13 (3) The place of supply of the following services shall be
the location where the services are actually performed, namely: —
(a) services supplied in respect of goods which are required to
be made physically available by the recipient of services to the supplier of
services, or to a person acting on behalf of the supplier of services in
order to provide the services:
Provided that when such services are provided from a remote
location by way of electronic means, the place of supply shall be the
location where goods are situated at the time of supply of services:
Provided further that nothing contained in this clause shall apply
in the case of services supplied in respect of goods which are temporarily
imported into India for repairs and are exported after repairs without being
put to any other use in India, than that which is required for such repairs;
|
13 (3) The place of supply of the following services shall be
the location where the services are actually performed, namely: —
(a) services supplied in respect of goods which are required to
be made physically available by the recipient of services to the supplier of
services, or to a person acting on behalf of the supplier of services in
order to provide the services:
Provided that when such services are provided from a remote
location by way of electronic means, the place of supply shall be the
location where goods are situated at the time of supply of services:
Provided
further that nothing contained in this clause shall apply in the case of
services supplied in respect of goods which are temporarily imported into
India for repairs or for any other treatment or
process and are exported after such
repairs or treatment or process without being
put to any
|
Amendment is made to not tax job
work of any treatment or process done on goods temporarily imported into
India (e.g., gold, diamonds) which are then exported. This is a
taxpayer-friendly amendment which would encourage skill development in our
country.
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Section 17 (2A) – Apportionment of tax and settlement of funds
|
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-----
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(2A). The amount not apportioned under sub-section (1)
and sub-section (2) may, for the time being, on the recommendations of the
Council, be apportioned at the rate of fifty per cent. to the Central
Government and fifty per cent. to the State Governments or the Union
territories, as the case may be, on ad hoc basis and shall be adjusted
against the amount apportioned under the said sub-sections.
|
This amendment provides that the amount of IGST which does not
get apportioned under clauses (a) to (f) for the time being shall be
apportioned to the Central Government and State Government/Union Territories
@ 50% each on the recommendations of the Council and shall be adjusted
against the amounts apportioned under clauses (a) to (f).
|
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New proviso in Section 20 – Application of provisions of the
CGST Act
|
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------
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Provided
also that where the appeal is to be filed before the Appellate Authority or
the Appellate Tribunal, the maximum amount payable shall be fifty crore
rupees and one hundred crore rupees respectively.
|
This amendment prescribes the
maximum ceiling of INR 50 crores/ 100 crores as pre-deposit for filing appeal
to Appellate Authority/ Appellate Tribunal respectively.
The amendment is made in line with
amendments proposed in Section 107(6) and 112(8) of the CGST Act, 2017.
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Hope the information will assist you in your Professional endeavours.
In case of any query/ information, please do not hesitate to write back to us.
Thanks & Best Regards,
Bimal Jain
FCA, FCS, LLB, B.Com
(Hons)
COMMENTS