INTRODUCTION
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The Finance Act, 2020 has made several amendments to the
CGST Act, 2017 and corresponding amendments to the IGST Act, 2017 and UTGST
Act, 2017. We have attempted to analyse the provision wise
amendment made by the Finance Act, 2020 to the CGST Act, 2017.
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Section 2 - Amendment in the definition of
Union Territory
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Before
Amendment
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After
Amendment
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SECTION 2. Definitions
(114) “Union territory” means the
territory of—
(a)
the Andaman and Nicobar Islands;
(b)
Lakshadweep;
(c)
Dadra and Nagar
Haveli;
(d)
Daman and Diu;
(e)
Chandigarh; and
(f)
other territory.
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SECTION 2. Definitions
(114) “Union territory” means the
territory of—
(a)
the Andaman and Nicobar Islands;
(b)
Lakshadweep;
(c)
Dadra and Nagar Haveli and Daman and Diu;
(d)
Ladakh;
(e)
Chandigarh; and
(f)
other territory.
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Analysis:
The above amendment has been made due to reorganization of
Union Territories by way of merger in case of ‘Dadra and Nagar Haveli
and Daman and Diu’ and
constitution of new Union
Territory ‘Ladakh’.
Section 10 - Person opting for Composition
Scheme cannot make supply of non-taxable services, inter-state supply of
services and supply of services through e- commerce operator
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Before
Amendment
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After
Amendment
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SECTION 10. Composition levy
(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)
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;
(e)
he is not a manufacturer of such goods as may be
notified by the Government on the
recommendations of the
Council; and
(f)
he is neither a casual taxable person nor a
non-resident taxable person
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SECTION 10. Composition levy
(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)
he is not engaged in making any supply of goods or services which are not leviable to tax under this Act;
(c)
he is not engaged in making any inter-State
outward supplies of goods or services;
(d)
he is not engaged in making any supply of goods or services through an electronic
commerce operator who is required
to collect tax at source under section 52;
(e)
he is not a manufacturer of such goods as may be
notified by the Government on the recommendations of the Council; and
(f) he is neither a
casual taxable person nor a
non-resident taxable person
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Analysis:
Section 10(1) of the CGST Act, 2017 provides that a class of registered person may opt to pay a
fixed rate of tax on his aggregate turnover subject to conditions and restrictions as may be prescribed. This facility is referred
as Composition Scheme or Composition Levy. Section 10(2) of the CGST Act, 2017 provides the conditions upon satisfaction of which a person will be eligible to opt for Composition Scheme.
The above amendment
provides for additional condition on the person who wants to opt for Composition Scheme under Section
10(1) of the CGST Act, 2017. The additional
conditions are as under:
a)
Such person shall not be engaged in in making any supply of
services which are not leviable to tax under the CGST Act;
b)
Such person shall not be not engaged
in making any inter-State outward
supplies of services;
c)
Such person shall not be engaged in making any supply of
services through an electronic commerce operator
who is required to collect
tax at source under section 52;
There might be a confusion that ‘not leviable to tax under CGST Act’ will include supply of
services which are exempt. In our view, ‘non-leviable to tax under CGST Act’ will only include
non-taxable supplies and not exempt supplies.
“(47) “exempt supply” means supply of any goods or
services or both which attracts nil rate of tax or which may be wholly exempt
from tax under section 11, or under section
6 of the Integrated Goods and Services Tax Act, and includes non-taxable supply;
(78) “non-taxable supply”
means a supply of goods or services
or both which is not
leviable to tax under this Act or
under the Integrated Goods and Services Tax Act;”
The above definitions make it clear that the
‘exempt supply’ includes ‘non-taxable supply’ but not vice versa. Thus, if the legislature intended to include both
‘exempt supply’ and ‘non-taxable supply’ it would have used the term ‘exempt
supply’ instead of ‘not leviable to tax
under CGST Act’.
It is important to note that the above conditions shall be applicable to the proviso
to Section 10(1) of the CGST
Act, 2017 which allows the person paying tax under Composition Scheme to make
Supply of services upto 10% of turnover in a State or UT. Thus, the person who
wants to opt for Composition Scheme can make Supply of services upto 10% of turnover but such supply of services shall not be a:
a)
Supply of services which are not leviable to tax
under the CGST Act, 2017;
b)
Inter-state Supply of services;
c)
Supply of services through an
electronic commerce operator who is required to collect tax under Section 52 of
the CGST Act, 2017.
Section 16 - Time limit to avail ITC
against Debit Note de-linked with the date of Invoice
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Before
Amendment
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After
Amendment
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SECTION 16. Eligibility and conditions for taking input tax credit
(4) – A registered person shall not be entitled to take input tax
credit in respect of any invoice or debit note for supply of goods or
services or both after the due
date of furnishing of the return under section 39 for the month of September following the end of financial
year to which such invoice or invoice relating to such debit note pertains or
furnishing of the relevant annual
return, whichever is earlier.
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SECTION 16. Eligibility and conditions
for taking input tax credit
(4) – A registered person shall not be entitled to take input tax
credit in respect of any invoice or debit note for supply of goods or
services or both after the due
date of furnishing of the return under section 39 for the month of September following the end of financial
year to which such invoice or
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Analysis:
Section 16(4) of the CGST Act, 2017 provided a time
limit for availing Input Tax Credit with respect to an invoice
or debit note. The time limit for availing Input Tax Credit
against a debit note was linked with the date of
invoice against which such debit note was issued.
For example: An invoice was issued in FY 2017-18 and a debit
note against the said invoice was issued in November 2018, than the recipient of supply shall not be eligible to avail Input Tax Credit based on such debit note as the due date for availing Input Tax Credit
was the due date of furnishing of
the GSTR-3B for the month of September following the end of financial year to
which such invoice relating to such debit note
pertains.
The lacuna in
the law is addressed by the above amendment. However, unless the Central
Government makes the above amendment
effective from 1st July 2017,
the said amendment
will lead to the litigation with respect to its date of applicability.
Section 29 - Person who opted for Voluntary Registration
can apply for Cancellation of Registration
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Before
Amendment
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After
Amendment
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SECTION 29. Cancellation or
suspension of registration
(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)
the business has been discontinued, transferred
fully for any reason including death of the proprietor, amalgamated with
other legal entity, demerged or otherwise disposed of; or
(b)
there is any change in the
constitution of the business; or
(c)
the taxable person, other than the person registered under sub-section
(3) of section 25, is no
longer liable to be registered under section 22 or section 24
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SECTION 29. Cancellation or
suspension of registration
(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)
the business has been discontinued, transferred
fully for any reason including death of the proprietor, amalgamated with
other legal entity, demerged or otherwise disposed of; or
(b) there is any change in the constitution of the business; or
(c) the
taxable person is no longer liable to be registered under section 22 or
section 24 or intends to optout of the registration voluntarily made under
sub-section (3) of section 25
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Analysis:
After the amendment, the person who has taken voluntary registration under
Section 25(3) of the CGST Act, 2017, who was otherwise not required to get registered under Section 22 or
Section 24 of the CGST Act, 2017, can now apply for cancellation of registration.
Section 30 - Provision for Condonation of Delay in filing
application for Revocation of Cancellation
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Before Amendment
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After Amendment
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SECTION
30. Revocation of cancellation of registration
(1) Subject to such
conditions as may be
prescribed, any registered person, whose registration is cancelled by the
proper officer on his own motion, may apply
to such officer for revocation of cancellation of the registration in the
prescribed manner within thirty days from the date of service of the
cancellation order:
Provided
that
the registered person who was served notice under sub- section (2) of section
29 in the manner as provided in clause (c) or clause (d) of sub-section (1) of section 169 and
who could not reply to the said notice, thereby resulting in cancellation of
his registration certificate and is hence unable to file application for
revocation of cancellation of registration under sub-section (1) of section
30 of the Act, against such order passed up to 31-3- 2019, shall
be allowed to file application for revocation of
cancellation of the registration
not later than 22-7-2019.
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SECTION 30. Revocation of cancellation
of registration
(1)
Subject to such conditions as may be prescribed, any registered person,
whose registration is cancelled by the proper officer on his own motion, may
apply to such officer for revocation of cancellation of the registration in
the prescribed manner within thirty days from the date of service of the
cancellation order:
Provided
that such period may, on sufficient cause being shown, and for reasons to be
recorded in writing, be extended,—
(a)
by the Additional Commissioner or the Joint
Commissioner, as the case may be, for a period not exceeding thirty days;
(b) by
the Commissioner, for a further period not exceeding thirty days, beyond
the period specified in clause (a)
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Analysis:
Section 30(1) of the CGST Act, 2017 provides that if the
registration of any person has been canceled suomotu by the proper officer than such person can apply for
revocation of cancellation within 30 days of the order of cancellation. Many
taxpayers faced difficulty to revoke the cancellation as they could make the
revocation application within 30 days from the service of the order and the
proper officer had no authority to condone the delay.
Accordingly, the Central Government inserted a proviso
to Section 30(1) of the CGST Act, 2017 to provide that the registered persons
who registration has been cancelled till 31st March 2019
can file a revocation application till 22nd July 2019.
The above
amendment has addressed the above issue and empowered the Additional
Commissioner and the Joint Commissioner to extend the time period of filing of
application for revocation of cancellation by 30 days and thereafter, the
Commissioner has been empowered to extend the said period further by 30 days.
In other words, delay of upto 60 days, after the expiry of initial 30 days for filing of application for revocation of cancellation, can be condoned by the appropriate authorities.
Section
31 – Power of Central Government widened with respect to Tax Invoice
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Before
Amendment
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After
Amendment
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SECTION 31. Tax invoice
(2)
– A registered person supplying taxable services
shall, before or after the provision of service but within a prescribed
period, issue a tax invoice, showing the description, value, tax charged
thereon and such other particulars as may be
prescribed:
Provided
that
the Government may, on the recommendations of the Council, by notification
and subject to such conditions as may be mentioned therein, specify the
categories of services in respect of which —
(a) any other
document issued in relation to the
supply shall be deemed to be a tax invoice;
or
(b) tax invoice may
not be issued.
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SECTION 31. Tax
invoice
(2)
– A registered person supplying taxable services
shall, before or after the provision of service but within a prescribed
period, issue a tax invoice, showing the description, value, tax charged
thereon and such other particulars as may be
prescribed:
Provided that the Government may, on the recommendations of
the Council, by notification,—
(a)
specify
the categories of services or supplies in respect of which a tax invoice
shall be issued, within such time and in such manner as may be prescribed;
(b)
subject
to the condition mentioned therein, specify the categories of services in
respect of which—
(i)
any
other document issued in relation to the supply
shall be deemed to be a tax
invoice; or
(ii)
tax
invoice may not be issued.
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Analysis:
The proviso to Section 31(2) of the CGST Act has been
amended to widen the powers to the Central Government to notify the categories of services in respect of which a tax invoice
shall be issued within such time and in such manner as may be prescribed.
Thus, the
Central Government can now even prescribe a different time limit for issuance
of tax invoices for such categories of services as may be notified.
Section 51 – TDS Certificate
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Before
Amendment
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After
Amendment
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SECTION 51. Tax deduction at source. —
(3) The deductor
shall furnish to the deductee a certificate mentioning therein
the contract value, rate of deduction, amount deducted, amount paid to the
Government and such other particulars in such manner as may be prescribed.
(4)
If any deductor fails to furnish to the deductee
the certificate, after deducting the tax at source, within five days of crediting the amount so deducted
to the Government, the deductor shall pay, by way of a late fee, a sum of one
hundred rupees per day from the day after the expiry of such five days period
until the failure is rectified, subject to a maximum amount of five thousand
rupees.
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SECTION 51. Tax deduction at source. —
(3)
A certificate of tax deduction at
source shall be issued in such form and in such manner as may be prescribed.
(4)
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Analysis:
Section 51(1) of the CGST Act, 2017 mandates certain
class of person, specified therein and as notified by the Central
Government, to deduct
tax at source at the time of making payment to the supplier.
The above
amendment provides that the form and manner of issuing certificate for
deduction of tax at source shall be provided in the CGST Rules, 2017. Further,
the provision imposing late fee for not issuing the certificate within the
prescribed time limit has been omitted.
The amendment seems to protect the interest of the
Government as the class of persons liable to deduct tax includes the department
of Central or State Government, Local Authorities, Government Agencies and
PSUs.
Section 109 – Constitution of Appellate
Tribunal and Benches for J&K
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Before
Amendment
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After
Amendment
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SECTION
109. Constitution of Appellate Tribunal and Benches thereof. —
(6) The Government shall,
by notification, specify for each State or Union territory except for the
State of Jammu and Kashmir, a Bench of the Appellate Tribunal (hereafter in
this Chapter, referred to as “State Bench”) for exercising the powers of the
Appellate Tribunal within the concerned State or Union territory :
Provided
that
for the State of Jammu and Kashmir, the State Bench of the Goods and Services
Tax Appellate Tribunal constituted under this Act shall be the State
Appellate Tribunal constituted under the Jammu and Kashmir Goods and Services
Tax Act, 2017
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SECTION
109. Constitution of Appellate Tribunal and Benches thereof. — (6) The
Government shall, by notification,
specify for each State or Union
territory
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Analysis:
The above amendment
has been made due to reorganization of erstwhile State of Jammu and
Kashmir. The
Central Government has been empowered to notify the bench of Appellate Tribunal
for the newly constituted Union Territory of Jammu & Kashmir.
Section 122 - Beneficiary to be Penalized
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Analysis:
Sub Section (1A) has been inserted to Section 122 of the
CGST Act, 2017 to provide that the transactions where:
a)
any goods or services or both have
been supplied without issue of any invoice or issues an incorrect or false
invoice with regard to any such supply;
b)
any invoice or bill has been issued
without supply of goods or services or both in violation of the provisions of
the CGST Act, 2017 or the rules made thereunder;
c)
input tax credit has been taken or
utilised without actual receipt of goods or services or both either fully or
partially, in contravention of the provisions of this Act or the rules made thereunder;
d)
input tax credit has been taken or
distributed in contravention of section 20, or the rules made thereunder
then a person who retains the benefit of the above
transaction and at whose instance such transaction is conducted shall be liable
to penalty of an amount equivalent to the tax evaded
or input tax credit availed of or passed on.
The purpose of
the above amendment is to penalize the person who is the ultimate beneficiary
of the fraud transactions and the person at whose direction the fraud
transaction has been conducted.
Section 132- Beneficiary to be Penalized
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Before
Amendment
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After
Amendment
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SECTION 132. Punishment for certain offences. — (1) Whoever
commits any of the following offences, namely :—
(c) avails input tax
credit using such invoice or bill referred to in clause (b);
(e) evades tax,
fraudulently avails input tax credit
or fraudulently obtains refund and where such offence is
not covered under clauses (a) to (d)
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SECTION 132. Punishment
for certain offences. — (1) Whoever commits, or
causes to commit and retain the benefits arising out of, any
of the following offences :—
(c)
avails input tax credit using the invoice or bill referred to in clause
(b)
or fraudulently avails input tax credit without any invoice or bill;
(e) evades tax,
obtains refund and where such
offence is not covered under clauses (a) to (d)
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Analysis:
The purpose to
amend Sub-section (1) of Section 132 of the CGST Act, 2017 is to penalize the
person who actually gets benefited from the fraudulent transactions and the
person at whose instance such fraudulent transactions are committed.
Section 140 – Retrospective Amendment
to empower Government to prescribe time limit
to carry forward the Transitional Credit
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Before
Amendment
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After
Amendment
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SECTION 140.
Transitional arrangements for 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 [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 :
(2)
A registered person, other than a person opting to
pay tax under section 10, shall be entitled to take, in his electronic credit
ledger, credit of the unavailed CENVAT credit in respect of capital goods,
not carried forward in a return, furnished under the existing law by him, for
the period ending with the day immediately preceding the appointed day in
such manner as may be prescribed :
(3)
A registered person, who was not liable to be
registered under the existing law, or who was engaged in the
manufacture of exempted goods or provision of exempted services, or who was
providing works contract service and was availing of the benefit of
notification No. 26/2012-Service Tax,
dated the 20th June, 2012 or a first stage dealer
or a second stage dealer or
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SECTION 140.
Transitional arrangements for 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 [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 within such time and in
such manner as may be prescribed :
(2)
A registered person, other than a person opting to
pay tax under section 10, shall be
entitled to take, in his electronic credit ledger, credit of the unavailed
CENVAT credit in respect of capital goods,
not carried forward in a return, furnished under the existing law by him, for
the period ending with the day immediately preceding the appointed day within such time and in such manner as
may be prescribed :
(3)
A registered person, who was not liable to be
registered under the existing law, or who was engaged in the manufacture of
exempted goods or provision of exempted services, or who was providing works
contract service and was availing of the benefit of notification No.
26/2012-Service Tax, dated the 20th June, 2012 or a first
stage
dealer
or
a
second stage dealer or a registered importer or
a depot of a
manufacturer,
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a registered importer or a
depot of a manufacturer, shall be entitled to take, in his electronic credit
ledger, credit of eligible duties in respect of inputs held in stock and
inputs contained in semi- finished or finished goods held in stock on the appointed
day subject to the following conditions, namely :–
…
…
(5)
A registered person shall be entitled to take, in
his electronic credit ledger, credit of eligible duties and taxes in respect
of inputs or input services received on or after the appointed day but the
duty or tax in respect of which has been paid by the supplier under the
existing law, subject to the
condition that the invoice or any other duty or tax paying document of the
same was recorded in the books of account of such person within a period of
thirty days from the appointed day.
(6)
A registered person, who was either paying tax at
a fixed rate or paying a fixed amount in lieu of the tax payable under the
existing law shall be entitled to take, in his electronic credit ledger,
credit of eligible duties in respect of inputs held in stock and inputs
contained in semi-finished or finished goods held in stock on the appointed
day subject to the following conditions, namely :—
…
…
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shall be entitled to take,
in his electronic credit ledger, credit of eligible duties in respect of
inputs held in stock and inputs contained in semi-finished or finished goods
held in stock on the appointed day, within such
time and in such manner as may be prescribed, subject to the
following conditions, namely :––
…
…
(5)
A registered person shall be entitled to take, in
his electronic credit ledger, credit of eligible duties and taxes in respect
of inputs or input services received on or after the
appointed day but the duty or tax in respect of which
has been paid by the supplier under the existing law, within
such time and in such manner as may be prescribed, subject to the condition that the invoice
or any other duty or tax paying document of the same was recorded in
the books of account of such person within a period of thirty days from the
appointed day.
(6)
A registered person, who was either paying tax at
a fixed rate or paying a fixed amount in lieu of the tax payable under the existing law shall be entitled to take, in his electronic credit ledger, credit
of eligible duties in respect of inputs held in stock and inputs contained in
semi- finished or finished goods held in stock on the appointed day, within such
time and in such manner as may be prescribed, subject to the
following conditions, namely :—
…
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(7) Notwithstanding
anything to the contrary contained in this Act,
the input tax credit on
account of any services received prior to the appointed day by an Input
Service Distributor shall be eligible for distribution as credit under this
Act even if the invoices relating to such services are received on or after
the appointed day.
(8) Where a
registered person having
centralised registration under the existing law has obtained a registration under this Act, such
person shall be allowed to take, in his electronic credit ledger, credit of
the amount of CENVAT credit carried forward in a return, furnished under the
existing law by him, in respect of the period ending with the day immediately preceding the
appointed day in such manner as may be prescribed :
(9)
Where any CENVAT
credit availed for the input services provided under the existing law
has been reversed due to non-payment of the consideration within a period of
three months, such credit can be reclaimed subject to the condition that the
registered person has made the payment of the consideration for that supply
of services within a period of three months from the appointed day.
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…
(7)
Notwithstanding anything to the contrary contained
in this Act, the input tax credit on account of any services received prior
to the appointed day by an Input Service Distributor shall be eligible for
distribution as credit under this Act, within such
time and in such manner as may be prescribed, even if the
invoices relating to such services are received on or after the appointed day.
(8)
Where a registered person having centralised registration under the existing law has obtained a
registration under this Act, such person shall be allowed to take, in his
electronic credit ledger,
credit of the amount of CENVAT credit
carried forward in a
return, furnished under the existing law by him, in respect
of the period
ending with the day immediately preceding the appointed day, within such time and in such manner as
may be prescribed :
(9)
Where any CENVAT credit availed for the input
services provided under the existing law has been reversed due to non- payment of the consideration within
a period of three months, such credit can
be reclaimed, within such
time and in such manner as may be prescribed, subject to the condition that the registered
person has made the payment of the consideration for that supply of services
within a period of three months from the appointed day.
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Analysis:
The term “within
such time” has been inserted among various provisions of Section 140 of the
CGST Act, 2017. The said amendment has been given a retrospective effect from 1st July
2017.
There were several petitions filed before various High
Courts challenging the validity of the time
limit provided under Rule 117 of the CGST Rules, 2017 to carry forwards
the balance of Cenvat Credit of the existing laws. However, the validity of Rule 117 of the CGST Rules,
2017 has been recently upheld by the Hon’ble High Court of Bombay in the
case of NELCO Ltd. vs. UOI & Ors. (Writ Petition No.6998 of 2018).
The amendment
seeks to regularize the lacuna in the law and end the litigation with respect to validity of Rule 117 of the CGST
Rules, 2017.
Section 168 – Power to issue instructions or
directions
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Before
Amendment
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After
Amendment
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SECTION
168. Power to issue instructions or directions. —
(2) The Commissioner specified
in clause (91) of section 2, sub-section (3) of section 5, clause (b)
of sub-section (9) of section 25, sub-sections (3) and (4) of section 35, sub-section
(1) of section 37, sub-section (2) of section 38, sub-section
(6) of section 39, sub-section (1) of section 44, sub-sections (4) and (5) of
section 52, sub-section (5) of section 66, sub-section
(1) of section 143,
sub-section (1) of section 151, clause
(l) of sub-section (3) of section 158 and section 167 shall mean
a Commissioner or Joint
Secretary posted in the
Board and such
Commissioner or Joint Secretary shall exercise the
powers specified in the said sections with the approval of the Board.
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SECTION 168. Power to issue instructions or
directions. —
(2) The Commissioner specified in clause
(91) of section 2,
sub-section (3) of section 5, clause (b) of sub-section (9) of section 25,
sub-sections (3) and (4) of section 35, sub-section (1) of section
37, sub-section
(2) of section 38,
sub-section (6) of section 39, sub-section (1) of section 44, sub- sections (4) and (5) of section 52,
sections with the approval of the Board.
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Analysis:
Section 168(2) of the CGST Act, 2017 provides that the Commissioner
specified in various provisions of the Act mentioned therein shall mean the
Commissioner or Joint Secretary posted in the Board and such Commissioner or
Joint Secretary shall exercise the powers specified in the said sections with
the approval of the Board.
The above
amendment removed sub-section (5) of section 6 and the second proviso to sub-
section (1) of section 143 from Section 168(2) of the CGST Act, 2017. In other words,
the Commissioner determining the expenses and the remuneration for the special
audit directed under Section 66 of the CGST Act, 2017 need not be the Commissioner or Joint Secretary
posted in the Board.
Similarly, the Commissioner empowered
under the second proviso to Section 143(1)
of the CGST Act, 2017 to extend the period for bringing back the goods
given for job-work shall also need not be the Commissioner or Joint Secretary
posted in the Board.
Section
172 – Extension of powers to issue Removal of Difficulty orders
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Before
Amendment
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After
Amendment
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SECTION
172. Removal of difficulties. — (1) If any difficulty arises in giving effect
to any provisions of this Act, the Government
may, on the recommendations of the Council, by a general or a special order
published in the Official Gazette, make such provisions not inconsistent with
the provisions of this Act or the rules or regulations made thereunder, as
may be necessary or expedient for the purpose of removing the said
difficulty:
Provided
that
no such order shall be made after the expiry of a period of
three
years from the date of commencement of this Act.
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SECTION
172. Removal of difficulties. — (1) If any difficulty arises in giving effect
to any provisions of this Act, the Government
may, on the recommendations of the Council, by a general or a special order
published in the Official Gazette, make such provisions not inconsistent with
the provisions of this Act or the rules or regulations made thereunder, as
may be necessary or expedient for the purpose of removing the said
difficulty:
Provided
that
no such order shall be made after the expiry of a period of
five years from the date of commencement of this Act.
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Analysis:
Section 172 of the CGST Act, 2017 empowers the Central
Government to issue orders to remove difficulties (for examples: extending due
date of filing of annual return) arising in giving effect to the provisions of
the CGST Act, 2017 or rules made thereunder.
The above
provision was due to expire on 30th June 2020 but now the
same has been extended upto 30th June 2022.
Schedule II - Entry No. 4
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Before
Amendment
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After
Amendment
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SCHEDULE II - Activities or Transactions to be
treated as supply of goods or supply of services:
4. Transfer of
business assets
(a) where goods
forming part of the assets of a business are transferred or disposed of by or
under the directions of the person carrying on the business so as no longer
to form part of those assets, whether or not for a consideration, such
transfer or disposal is a supply of goods by the
person;
(b) where, by or
under the direction of a person
carrying on a business, goods held or used for the purposes of the business
are put to any private use or are used, or made available to any person for
use, for any purpose other than a purpose of the business, whether or not for
a consideration, the usage or making available of such goods is a supply of
services.
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SCHEDULE
II - Activities or Transactions to be treated as supply of goods or supply of services:
4. Transfer of business
assets
(a) where goods
forming part of the assets of a business are transferred or disposed of by or
under the directions of the person carrying on the business so as no longer to form part of those
assets,
(b) where, by or
under the direction of a person carrying on a business, goods held or used
for the purposes of the business are put to any
private use or are
used, or made available to any person for
use, for any purpose other
than a purpose of the business,
services.
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Analysis:
The above amendment has been given retrospective effect
from 1st July 2017. Schedule II of the CGST Act, 2017 provides classification
of certain transaction or activities as goods or services.
In terms of Section 7(1)(c) of the CGST Act, 2017 the
transaction or activities which will be deemed to be ‘Supply’ under the CGST
Act, 2017 even if made without consideration are already enlisted under
Schedule I of the CGST Act, 2017.
The intention
of the above amendment may be the possible overlapping of Schedule II into
Schedule I of the CGST Act, 2017.
Giving effect to the decision of 37th GST Council Meeting
Analysis:
The GST Council
in its 37th meeting recommended that the Fishmeal
shall be exempted
from GST for the period 1st July 2017 to 30th September
2018 due to classification issue.
Similarly, the Council also recommended for concessional
rate of GST @12% on supply of pulley, wheels and other parts used as a part of
agriculture machinery for the period 1st July 2017 to 31st December
2018.
The above
amendment give effect to the decision of the GST Council. The amendment also
provides that if any tax (in case of Fishmeal)
or tax at the higher rate (in case of supply of pulley,
wheels and other parts) has been collected than the same shall not be refunded.
No
Refund on account of Inverted Duty Structure – Retrospective Effect
Analysis:
The above amendment gives retrospective effect to Notification
No. 3/2019-CT (Rate) dated 30.09.2019. The said notification has been issued
under Section 54(3)(ii)
of the CGST Act, 2017 and prohibits refund of accumulated Compensation
Cess credit on account of inverted duty structure to the manufacturer of
Tobacco and manufactured tobacco substitutes.
Thus, the
manufacturer of Tobacco and manufactured tobacco substitutes will not be
eligible to claim refund
of accumulated Compensation Cess credit on account of inverted duty structure
w.e.f.
1st July 2017.
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