Several amendments have been proposed to be made in the CGST Act, 2017 and IGST Act, 2017 by Clause 99 to Clause 114 of the Finance Bill, 2021 which is part of the in the Union Budget, 2021 presented today by Hon’ble Finance Minister Nirmala Sitharaman.
It may be noted that all these amendments will be effective from a date to be notified as GST Law is having concurrent and these amendments can be enforced only when all the State Legislatures pass the amendment to CGST Act/IGST Act.
For ready reference of our readers the proposed amendments are briefed below:
Clause 99: Amendment in definition of Supply ‘Section 7’:- Insertion of new clause (aa)
In the CGST Act, 2017 in section 7, in sub-section (1), after clause (a), the following clause shall be inserted and shall be deemed to have been inserted with effect from the 1st day of July, 2017, namely:––
“(aa) the activities or transactions, by a person, other than an individual, to its members or constituents or vice-versa, for cash, deferred payment or other valuable consideration.
Explanation.––For the purposes of this clause, it is hereby clarified that, notwithstanding
anything contained in any other law for the time being in force or any judgment, decree or
order of any Court, tribunal or authority, the person and its members or constituents shall be
deemed to be two separate persons and the supply of activities or transactions inter se shall be
deemed to take place from one such person to another;
Above amendment is to ensure levy of tax on activities or transactions involving supply of goods or services by any person, other than an individual, to its members or constituents or vice-versa, for cash, deferred payment or other valuable consideration.
It is also proposed to insert an Explanation therein, to clarify that the person or its members or constituents shall be deemed to be two separate persons and the supply of activities or transactions inter se shall be deemed to take place from one person to another.
Clause 100: Amendment in Section 16: Eligibility and Conditions for taking ITC
Clause 100 of the Bill seeks to amend section 16 of the CGST Act by inserting a new clause (aa) in sub-section (2) thereof, so as to provide that input tax credit on invoice or debit note may be availed only when the details of such invoice or debit note has been furnished by the supplier in the statement of outward supplies and such details have been communicated to the recipient of such invoice or debit note.
The proposed new clause (aa) reads as under:
(aa) the details of the invoice or debit note referred to in clause (a) has been furnished by the supplier in the statement of outward supplies and such details have been communicated to the recipient of such invoice or debit note in the manner specified under section 37;
Clause 101: Omission of Section 35(5) mandating for GST Audit
Clause 101 of the Bill seeks to omit sub-section (5) of section 35 of the CGST Act so as to remove the mandatory requirement of getting annual accounts audited and the reconciliation statement submitted by specified professional viz Chartered Accountant / Cost Accountant.
Clause 102: Substitution of Section 44: Annual Return
Clause 102 of the Bill seeks to substitute a new section for section 44 of the CGST Act so as to remove the mandatory requirement of furnishing a reconciliation statement duly audited by specified professional and to provide for filing of the annual return on self-certification basis. It further empowers the Commissioner to exempt a class of taxpayers from the requirement of filing the annual return.
The substituted Section 44 is reproduced below:
Annual return
44. Every registered person, other than an Input Service Distributor, a person paying tax under section 51 or section 52, a casual taxable person and a non-resident taxable person shall furnish an annual return which may include a self-certified reconciliation statement, reconciling the value of supplies declared in the return furnished for the financial year, with the audited annual financial statement for every financial year electronically, within such time and in such form and in such manner as may be prescribed:
Provided that the Commissioner may, on the recommendations of the Council, by notification, exempt any class of registered persons from filing annual return under this section.
Provided further that nothing contained in this section shall apply to any department 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 General of India or an auditor appointed for
auditing the accounts of local authorities under any law for the time being in force.
Clause 103: Amendment in Section 50: Interest on delayed payment of tax
Clause 103 of the Bill seeks to amend section 50 of the Central Goods and Services
Tax Act to substitute the proviso to sub-section (1) so as to charge interest on net cash
liability retrospectively with effect from the 1st July, 2017.
In section 50 of the CGST Act, in sub-section (1), for the proviso, the following proviso shall be substituted and shall be deemed to have been substituted with effect from the 1st day of July, 2017, namely:––
Provided that the interest on tax payable in respect of supplies made during a tax period and
declared in the return for the said period furnished after the due date in accordance with the
provisions of section 39, except where such return is furnished after commencement of any
proceedings under section 73 or section 74 in respect of the said period, shall be payable on
that portion of the tax which is paid by debiting the electronic cash ledger.
Clause 104: Amendment in Section 74
Clause 104 of the Bill seeks to amend section 74 of the CGST Act so as to make seizure and confiscation of goods and conveyances in transit a separate proceeding from the recovery of tax.
Existing Explanation 1.— For the purposes of section 73 and this section, —
(ii) where the notice under the same proceedings is issued to the main person liable to pay tax
and some other persons, and such proceedings against the main person have been concluded
under section 73 or section 74, the proceedings against all the persons liable to pay penalty
under sections 122, 125, 129 and 130 are deemed to be concluded.
Amendment made:
In section 74 of the CGST Act, in Explanation 1, in clause (ii), for the words and figures ―sections 122, 125, 129 and 130, the words and figures ―sections 122 and 125” shall be substituted. The amended clause (ii) would read as under:
ii) where the notice under the same proceedings is issued to the main person liable to pay tax
and some other persons, and such proceedings against the main person have been concluded
under section 73 or section 74, the proceedings against all the persons liable to pay penalty
under sections 122 and 125 are deemed to be concluded.
Clause 105: Amendment in Section 75
Clause 105 of the Bill seeks to amend section 75 of the CGST Act so as to insert an Explanation in sub-section (12) to clarify that “self-assessed tax” shall include the tax payable in respect of details of outward supplies furnished under section 37, but not included in the return furnished under section 39.
In section 75 of the CGST Act, in sub-section (12), the following Explanation shall be inserted, namely:––
Explanation.––For the purposes of this sub-section, the expression “self-assessed tax” shall
include the tax payable in respect of details of outward supplies furnished under section 37
but not included in the return furnished under section 39.‘
Clause 106: Amendment in Section 83 ‘Provisional Attachment’
Clause 106 of the Bill seeks to substitute sub-section (1) of section 83 of the CGST Act so as to provide that provisional attachment shall remain valid for the entire period starting from the initiation of any proceeding under Chapter XII, Chapter XIV or Chapter XV till the expiry of a period of one year from the date of order made thereunder.
Existing sub-section (1) of Section 83:
(1) Where during the pendency of any proceedings under section 62 or section 63 or section 64
or section 67 or section 73 or section 74, the Commissioner is of the opinion that for the
purpose of protecting the interest of the Government revenue, it is necessary so to do, he may,
by order in writing attach provisionally any property, including bank account, belonging to the
taxable person in such manner as may be prescribed.
Substituted sub-section (1) of Section 83:
(1) Where, after the initiation of any proceeding under Chapter XII, Chapter XIV or Chapter
XV, the Commissioner is of the opinion that for the purpose of protecting the interest of the
Government revenue it is necessary so to do, he may, by order in writing, attach provisionally,
any property, including bank account, belonging to the taxable person or any person specified
in sub-section (1A) of section 122, in such manner as may be prescribed.
Clause 107: Amendment in Section 107 of the CGST Act
Clause 107 of the Bill seeks to insert a new proviso in sub-section (6) of section 107 of the CGST Act so as to provide that no appeal shall be filed against an order made under sub-section (3) of section 129, unless a sum equal to twenty-five per cent. of the penalty has been paid by the appellant.
The following proviso shall be inserted, namely:––
Provided that no appeal shall be filed against an order under sub-section (3) of section 129,
unless a sum equal to twenty-five per cent. of the penalty has been paid by the appellant.”.
Clause 108: Amendment in Section 129 of the CGST Act
Clause 108 of the Bill seeks to amend section 129 of the CGST Act so as to delink the proceedings under that section relating to detention, seizure a release of goods and conveyances in transit, from the proceedings under section 130 relating to confiscation of goods or conveyances and levy of penalty.
Amended Sec. 129 of the CGST Act, 129
(1) Notwithstanding anything contained in this Act, where any person transports any goods or
stores any goods while they are in transit in contravention of the provisions of this Act or the
rules made thereunder, all such goods and conveyance used as a means of transport for
carrying the said goods and documents relating to such goods and conveyance shall be liable to
detention or seizure and after detention or seizure, shall be released, –
―(a) on payment of penalty equal to two hundred per cent. of the tax payable on such
goods and, in case of exempted goods, on payment of an amount equal to two per cent. of the
value of goods or twenty-five thousand rupees, whichever is less, where the owner of the goods
comes forward for payment of such penalty;
(b) on payment of penalty equal to fifty per cent. of the value of the goods or two hundred
per cent. of the tax payable on such goods, whichever is higher, and in case of exempted
goods, on payment of an amount equal to five per cent. of the value of goods or twenty-five
thousand rupees, whichever is less, where the owner of the goods does not come forward for
payment of such penalty;
(c) upon furnishing a security equivalent to the amount payable under clause (a) or clause (b) in
such form and manner as may be prescribed:
Provided that no such goods or conveyance shall be detained or seized without serving an order
of detention or seizure on the person transporting the goods.
(2) The provisions of sub-section (6) of section 67 shall, mutatis mutandis, apply for detention
and seizure of goods and conveyances
(3) The proper officer detaining or seizing goods or conveyance shall issue a notice within
seven days of such detention or seizure, specifying the penalty payable, and thereafter,
pass an order within a period of seven days from the date of service of such notice, for
payment of penalty under clause (a) or clause (b) of sub-section (1);
(4) No penalty shall be determined under sub-section (3) without giving the person concerned
an opportunity of being heard.
(5) On payment of the amount referred to in sub-section (1), all proceedings in respect of the
notice specified in sub-section (3) shall be deemed to be concluded.
(6) Where the person transporting any goods or the owner of such goods fails to pay the amount
of penalty under sub-section (1) within fifteen days from the date of receipt of the copy of the order passed under sub-section (3), the goods or conveyance so detained or seized shall be liable to be sold or disposed of otherwise, in such manner and within such time as may be prescribed, to recover the penalty payable under sub-section (3):
Provided that the conveyance shall be released on payment by the transporter of penalty under
sub-section (3) or one lakh rupees, whichever is less:
Provided further 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 fifteen days may be
reduced by the proper officer.
Clause 109: Amendment in Section 130 of the CGST Act
Clause 109 of the Bill seeks to amend section 130 of the CGST Act, so as to delink the proceedings under that section relating to confiscation of goods or conveyances and levy of penalty from the proceedings under section 129 relating to detention, seizure and release of goods and conveyances in transit.
Existing Section 130 of the CGST Act, 2017
(1) Notwithstanding anything contained in this Act, if any person –
(i) supplies or receives any goods in contravention of any of the provisions of this Act or the
rules made thereunder with intent to evade payment of tax; or
(ii) does not account for any goods on which he is liable to pay tax under this Act; or
(iii) supplies any goods liable to tax under this Act without having applied for registration; or
(iv) contravenes any of the provisions of this Act or the rules made thereunder with intent to
evade payment of tax; or
(v) uses any conveyance as a means of transport for carriage of goods in contravention of the
provisions of this Act or rules made thereunder unless the owner of the conveyance proves that
it was so used without the knowledge or connivance of the owner himself, his agent, if any, and
the person in charge of the conveyance,
then, all such goods or conveyances shall be liable to confiscation and the person shall be liable
to penalty under section 122.
(2) Whenever confiscation of any goods or conveyance is authorized by this Act, the officer
adjudging it shall give to the owner of the goods an option to pay in lieu of confiscation, such
fine as the said officer thinks fit:
Provided that such fine leviable shall not exceed the market value of the goods confiscated, less
the tax chargeable thereon:
Provided further that the aggregate of such fine and penalty leviable shall not be less than the
amount of penalty leviable under sub-section (1) of section 129:
Provided also that where any such conveyance is used for the carriage of the goods or
passengers for hire, the owner of the conveyance shall be given an option to pay in lieu of the
confiscation of the conveyance a fine equal to the tax payable on the goods being transported
thereon.
(3) Where any fine in lieu of confiscation of goods or conveyance is imposed under sub-section
(2), the owner of such goods or conveyance or the person referred to in sub-section (1), shall, in
addition, be liable to any tax, penalty and charges payable in respect of such goods or conveyance.
Proposed amendment in Section 130 of the CGST Act, 2017
(a) in sub-section (1), for the words ―Notwithstanding anything contained in this Act, if , the
word ―Where” shall be substituted;
(b) in sub-section (2), in the second proviso, for the words, brackets and figures ―amount of
penalty leviable under sub-section (1) of section 129, the words “penalty equal to hundred
per cent. of the tax payable on such goods” shall be substituted;
(c) sub-section (3) shall be omitted.
Clause 110: Amendment in Section 151 of the CGST Act
Clause 110 of the Bill seeks to substitute section 151 of the CGST Act so as to empower the jurisdictional commissioner to call for information from any person relating to any matters dealt with in connection with the Act.
Existing Section 151:
(1) The Commissioner may, if he considers that it is necessary so to do, by notification, direct
that statistics may be collected relating to any matter dealt with by or in connection with this
Act.
(2) Upon such notification being issued, the Commissioner, or any person authorised by him in
this behalf, may call upon the concerned persons to furnish such information or returns, in
such form and manner as may be prescribed, relating to any matter in respect of which
statistics is to be collected.
Section 151 as substituted:
The Commissioner or an officer authorised by him may, by an order, direct any person to furnish information relating to any matter dealt with in connection with this Act, within such time, in such form, and in such manner, as may be specified therein.
Clause 111: Amendment in Section 152 of the CGST Act
Clause 111 of the Bill seeks to amend sub-section (1) of section 152 of the CGST Act so as to provide that no information obtained under sections 150 and 151 shall be used for the purposes of any proceedings under the Act without giving an opportunity of being heard to the person concerned.
Existing Section 152 ” Bar on Disclosure of Information’
(1) No information of any individual return or part thereof with respect to any matter given
for the purposes of section 150 or section 151 shall, without the previous consent in writing of
the concerned person or his authorised representative, be published in such manner so as to
enable such particulars to be identified as referring to a particular person and no such
information shall be used for the purpose of any proceedings under this Act.
(2) Except for the purposes of prosecution under this Act or any other Act for the time being in
force, no person who is not engaged in the collection of statistics under this Act or compilation
or computerisation thereof for the purposes of this Act, shall be permitted to see or have access
to any information or any individual return referred to in section 151.
Proposed Amendment in Section 152:
In section 152 of the CGST Act,––
(a) in sub-section (1),––
(i) the words ―’of any individual return or part thereof’ shall be omitted;
(ii) after the words ‘any proceedings under this Act’ , the words “without giving an opportunity of being heard to the person concerned” shall be inserted;
(b) sub-section (2) shall be omitted.
Clause 112: Amendment in Section 168 of the CGST Act
Clause 112 of the Bill seeks to amend section 168 of the Central Goods and Services
Tax Act so as to enable the jurisdictional commissioner to exercise powers under section
151 to call for information.
Existing Section 168: Power to issue Instructions or Directions
(1) The Board may, if it considers it necessary or expedient so to do for the purpose of uniformity in the implementation of this Act, issue such orders, instructions or directions to the central tax officers as it may deem fit, and thereupon all such officers and all other persons employed in the implementation of this Act shall observe and follow such orders, 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, subsection (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, except the second proviso thereof], subsection (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.
Proposed Amendment in Section 168:
In section 168 of the CGST Act, in sub-section (2),––
(i) for the words, brackets and figures “sub-section (1) of section 44”, the word and figures
“section 44” shall be substituted;
(ii) the words, brackets and figures ―sub-section (1) of section 151, shall be omitted.
Clause 113: Amendment in Schedule-II of the CGST Act
Clause 113 of the Bill seeks to omit paragraph 7 of Schedule II to the CGST Act, with retrospective effect from the 1st day of July, 2017, consequent to the amendments made in section 7 as discussed in preceding para.
It may be noted that Schedule II mandates the activities or transactions to be treated as supply of goods or supply of services. Paragraph 7 of said Schedule states that Supply of goods by any unincorporated association or body of persons to a member thereof for cash, deferred payment or other valuable consideration, shall be regarded as supply of goods.
Now in view of amendment in Section 7 wherein new clause (aa) has been inserted, this paragraph 7 has been with effect from the 1st day of July, 2017.
Clause 114: Amendment in Section 16 of the IGST Act
Clause 114 of the Bill seeks to amend section 16 of the IGST Act, 2017 so as to make provisions for restricting the zero rated supply on payment of integrated tax only to specified class of taxpayers or specified supplies of goods or services. It further provides to link the foreign exchange remittance in case of export of goods with refund and further restricting zero rating of supplies made to special economic zone only when such supplies are for authorised operations.
Existing Section 16(1):
(1) “Zero rated supply” means any of the following supplies of goods or services or both, namely:
(a) export of goods or services or both; or
(b) supply of goods or services or both to a Special Economic Zone developer or a Special
Economic Zone unit.
Proposed amendment in Section 16(1):
In the IGST Act, 2017, in section 16-
(a) in sub-section (1), in clause (b), after the words ‘supply of goods or services or both’, the
words “for authorised operations” shall be inserted.
Existing Section 16(3):
(3) A registered person making zero rated supply shall be eligible to claim refund under either of
the following options, namely: ––
(a) he may supply goods or services or both under bond or Letter of Undertaking, subject to such conditions, safeguards and procedure as may be prescribed, without payment of integrated tax and claim refund of unutilized input tax credit;
or
(b) he may supply goods or services or both, subject to such conditions, safeguards and procedures as may be prescribed, on payment of integrated tax and claim refund of such tax
paid on goods or services or both supplied, in accordance with the provisions of section 54 of the Central Goods and Services Tax Act or the rules made thereunder.
Proposed Substituted Section 16(3):
(3) A registered person making zero rated supply shall be eligible to claim refund of unutilised input tax credit on supply of goods or services or both, without payment of integrated tax, under bond or Letter of Undertaking, in accordance with the provisions of section 54 of the Central Goods and Services Tax Act or the rules made thereunder, subject to such conditions, safeguards and procedure as may be prescribed:
Provided that the registered person making zero rated supply of goods shall, in case of non realisation of sale proceeds, be liable to deposit the refund so received under this subsection along with the applicable interest under section 50 of the Central Goods and Services Tax Act within thirty days after the expiry of the time limit prescribed under the Foreign Exchange Management Act, 1999 for receipt of foreign exchange remittances, in such manner as may be prescribed.
(4) The Government may, on the recommendation of the Council, and subject to such
conditions, safeguards and procedures, by notification, specify––
(i) a class of persons who may make zero rated supply on payment of integrated tax and claim
refund of the tax so paid;
(ii) a class of goods or services which may be exported on payment of integrated tax and the
supplier of such goods or services may claim the refund of tax so paid.
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