CENTRAL GOODS AND SERVICES TAX ACT, 2017
Effect to the revision in administrative division of the Country
- Section 2(114) of the CGST Act is proposed to be amended to include the newly formed Union Territory of Ladakh in the definition of "Union territory". Further, consequential amendments pursuant to merger of the Union Territories of Dadra and Nagar Haveli and Daman and Diu have been proposed. Similar amendments are proposed to be made in Section 1(2) and Section 2(8) of the UTGST Act.
- Section 109(6) of the CGST Act is proposed to be amended in order to enable the Central Government to notify bench of Appellate Tribunal for the State of Jammu and Kashmir as well. As per the existing provisions, the right to notify the bench of Appellate Tribunal for Jammu and Kashmir is with the State Government.
Amendment in Schedule II read with Section 7 of the CGST Act
- Entry 4(a) and 4(b) in Schedule II is proposed to be amended to omit the term "whether or not for a consideration" to align the entry with the amendment carried out in Section 7 of the CGST Act in 2018. This amendment is supposed to be made retrospective from July 1, 2017.
Amendment in the composition scheme
- Section 10(2) of the CGST Act is proposed to be amended to extend the scope of ineligibility to opt for composition scheme as per Section 10(1) of the CGST Act to the following persons:
- The person engaged in making supply of services which are not leviable to tax;
- The person engaged in making inter-state supply of services;
- The person engaged in making any supply of services through electronic commerce operator, liable to collect tax at source under Section 52 of the CGST Act.
Composition scheme was extended to service provider with aggregate turnover not exceeding INR 50 Lakhs vide Notification No. 2/2019 Central Tax (Rate) dated March 7, 2019. The aforesaid amendment is proposed to be made to bring parity between the provisions of composition schemes in the context of services and goods.
Delinking the date of issuance of debit note from the date of issuance of the underlying invoice for purposes of availing ITC
- The phrase 'invoice relating to such' is proposed to be omitted from Section 16(4) of the CGST Act. The amended Section 16(4) post implementation of this proposal would read as under:
- "(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 debit note pertains or furnishing of the relevant annual return, whichever is earlier :
- By way of the proposed amendment, time limit for availing ITC based on debit note shall be considered from the date of issuance of debit note instead of the date of issuance of corresponding invoice to which such debit note pertains.
The aforesaid amendment is a welcome move as the registered taxpayer is no longer required to keep the track of the date of corresponding invoice to evaluate time limit for ITC availability in respect of a debit note. The amendment is not proposed to be retrospective. Therefore, the position regarding availing the credit based on the debit note since the implementation of GST will still remain an interpretation issue
Cancellation of registration
- Section 29 of the CGST Act is proposed to be amended to allow cancellation of registration for the registered taxpayers who have voluntarily obtained registration as per Section 25(3) of the CGST Act.
Revocation of cancellation of registration
- Section 30 of the CGST Act is proposed to be amended to grant the power to the Additional Commissioner/Joint Commissioner to extend the time limit by further 30 days to file an application for revocation of cancellation of registration subject to sufficient cause being shown. A further extension of 30 days, after extension granted by the Additional Commissioner/Joint Commissioner may be granted by the Commissioner.
Powers to specify categories of service recipients for issuance of tax invoice
- Proviso to Section 31(2) is proposed to be amended to grant the power to the Central Government to specify the categories of services or supplies in respect of which a tax invoice shall be issued along with time and manner for issuance of such invoice.
Amendment to TDS provisions
- Section 51(3) of the CGST Act is proposed to be amended to provide that a certificate of TDS issued by the deductor of tax shall be issued in such form as may be prescribed.
- Section 51(4) of the CGST Act which prescribed late fee for delayed furnishing of the tax deduction certificate to the deductee is proposed to be omitted.
Expansion in the scope of penalty
- A new sub-section 1A is proposed to be inserted in Section 122 of the CGST Act to levy penalty equal to the amount of tax evaded or ITC availed or passed on by any person who retains the benefit of the below specified transactions and at whose instance such transaction is conducted in respect of the above stated offences.
- Supplies of goods or services or both without issue of any invoice or issuance of incorrect or false invoice;
- Issues invoice or bill without supply of goods or services or both in violation of the provisions of the CGST Act or the rules made thereunder;
- Takes or utilizes ITC without actual receipt of goods or services or both either with fully or partially, in contravention of the provisions of the CGST Act or the rules made thereunder;
- Takes or distributes ITC in contravention of Section 20 of the CGST Act or the rules made thereunder i.e. manner of distribution of credit by an ISD.
Expansion in the scope of person committing an offence
- Section 132 of the CGST Act i.e. punishment for certain offences, is proposed to be amended to include the persons who causes to commit and retain the benefits on specified offences.
- Section 132(1)(c) and (e) of the CGST Act are proposed to be amended to extend the punishment for the cases where ITC is availed fraudulently without any invoice or bill.
The Government has witnessed spurt in fraudulent activities like incorrect invoicing, incorrect availment of ITC, etc. in the GST regime. In order to mitigate the same, the Government is contemplating to make offences like fraudulent availment of ITC without invoice cognizable and non- bailable to provide necessary deterrent to impostors.
The said penal provisions will be applicable to all the persons who commit or cause to commit and retain the benefits.
Regularisation of Central Government's power to notify limitation for transitional provisions
- Section 140 of the CGST Act containing transitional provisions for Input tax credit is proposed to be amended with retrospective effect from July 1, 2017 to provide that such credit under various sub-sections of this provision shall be availed within such time and in such manner as may be prescribed by the Central Government.
Transitional provisions under the CGST Act enabled an assessee to carry forward or avail credit of the taxes paid during erstwhile regime. However, the said section was silent with respect to limitation of time applicable for such carry forward or availment, which was notified by Central Government under CGST Rules.
As the power to notify time-limitation was not supported by corresponding enabling provision under the Act, validity of such limitation was rendered litigious. To plug this anomaly, the transitional provisions are proposed to be amended to retrospectively empower Central Government to notify such limitation.
Extension of time for issuance of removal of difficulty order
- Section 172 of the CGST Act is proposed to be amended to increase the tenure of the Central Government's power to make provisions for removing any difficulty in giving effect to the provisions of CGST Act. This tenure is increased from 3 years to 5 years. Similar amendments are also proposed in the IGST Act and the UTGST Act.
Amendment in the CGST Act to address any difficulty in implementation of any provision thereof would necessitate due process in the parliament, resulting in possible delay in redressal of such difficulty. In order to circumvent such delay, the Central Government is empowered to issue an Order to make provisions to remove such difficulty, subject to the condition that such provisions are not inconsistent with the CGST Act itself.
The power was originally entrusted for a period of 3 years which is now proposed to be extended to 5 years.
Restriction on inverted duty structure refund for tobacco products
- The refund of accumulated credit of compensation cess on tobacco products arising out of inverted duty structure in Compensation Cess is disallowed w.e.f. October 01, 2019 vide Notification No. 3/2019-Compensation Cess (Rate) dated September 30, 2019. This Notification is being given retrospective effect from July 01, 2017 onwards. Accordingly, no refund of inverted duty structure shall be admissible on tobacco products even for the period July 1, 2017 even for the period July 01, 2017 to September 30, 2019.
Retrospective exemption/reduction in applicable rate of GST
- Rate of GST to retrospectively change on the following goods notwithstanding the rate as notified vide Notification G.S.R. 673(E), dated June 28, 2017 (as applicable for the CGST Act) and the corresponding Notifications as applicable for the IGST Act and the UTGST Act:
- Exemption to supply of fishmeal (tariff heading 2301) during July 01, 2017 to September 30, 2019;
- Levy at 12% (Central and State tax combined) for supply of pulley, wheels, other parts (tariff heading 8483) used as parts of agricultural machinery (tariff headings 8432, 8433 and 8436) during July 01, 2017 to December 31, 2018.
- The rate change referred above would not allow the assessee to claim refund of the tax paid already, which would not otherwise have been paid if above referred rate changes were effective during relevant period.
EXCISE TARIFF CHANGES
Chapter -wise changes in the NCCD rates are applicable w.e.f. February 02, 2020
|Sr. No.||CTH||Description of Goods||Existing Rate (%)||Revised Rate (%)|
|1||2402 20 10||Other than filter cigarettes, of length not exceeding 65 millimetres||Rs. 90 per thousand||Rs. 200 per thousand|
|2||2402 20 20||Other than filter cigarettes, of length exceeding 65 millimetres but not exceeding 70 millimetres||Rs. 145 per thousand||Rs. 250 per thousand|
|3||2402 20 30||Filter cigarettes of length (including the length of the filter, the length of filter being 11 millimetres or its actual length, whichever is more) not exceeding 65 millimetres||Rs. 90 per thousand||Rs. 440 per thousand|
|4||2402 20 40||Filter cigarettes of length (including the length of the filter, the length of filter being 11 millimetres or its actual length, whichever is more) exceeding 65 millimetres but not exceeding 70 millimetres||Rs. 90 per thousand||Rs. 440 per thousand|
|5||2402 20 50||Filter cigarettes of length (including the length of the filter, the length of filter being 11 millimetres or its actual length, whichever is more) exceeding 70 millimetres but not exceeding 75 millimetres||Rs. 145 per thousand||Rs. 545 per thousand|
|6||2402 20 90||Other||Rs. 235 per thousand||Rs. 735 per thousand|
|7||2402 90 10||Cigarettes of tobacco substitutes||Rs. 150 per thousand||Rs. 600 per thousand|
|8||2403 11 10||Hookah or gudaku tobacco||10%||25%|
|9||2403 19 10||Smoking mixtures for pipes and cigarettes||45%||60%|
|10||2403 19 90||Other||10%||25%|
|11||2403 91 00||"Homogenised" or "reconstituted" tobacco||10%||25%|
|12||2403 99 10||Chewing tobacco||10%||25%|
|13||2403 99 20||Preparations containing chewing tobacco||10%||25%|
|14||2403 99 30||Jarda scented tobacco||10%||25%|
|15||2403 99 40||Snuff||10%||25%|
|16||2403 99 50||Preparations containing snuff||10%||25%|
|17||2403 99 60||Tobacco extracts and essence||10%||25%|
|18||2403 99 90||Other||10%||25%|
The detailed Budget book can be viewed here.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.