Relevant changes related to GST and Custom
Central Goods and Services Tax
Amendment of section 7.
In the Central Goods and Services Tax Act, 2017 (hereinafter referred as the Central Goods and Services Tax Act), 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;”.
It is going to affect all AOP, Society, RWA, Club etc. They have entirely ignored concept of “Mutuality”. Since amendment is retrospectively, Tax officer will soon start sending notices for all these concerns.
Amendment of section 16.
In section 16 of the Central Goods and Services Tax Act, in sub-section (2), after clause (a), the following clause shall be inserted, namely:––
“(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;”.
Credit will be available based on supplier Invoice or Debit note furnished as output supply. No need to even refer to rule 36(4). Now credit will be only available if supplier furnished return and paid taxes.
Amendment of section 35.
In section 35 of the Central Goods and Services Tax Act, sub-section (5) shall be omitted.
Section 35(5) required GST audit to be done by CA, and CMA. The provision is now deleted.
Substitution of new section for section 44.
For section 44 of the Central Goods and Services Tax Act, the following section shall be substituted, namely:––
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.”.
Requirement of reconciliation statement which was submitted along with GST Audit has been changed now. Now it will be submitted along with Annual return.
Amendment of section 50.
In section 50 of the Central Goods and Services Tax 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 or 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.”.
Now one has to pay interest on delayed return on amount paid by debiting Cash ledger except in case of proceeding u/s 73 and 74. Since amendment is retrospective i.e. from 1st July 2017 be ready for notices from GST deptt.
Amendment of section 74.
In section 74 of the Central Goods and Services Tax Act, in Explanation 1, in clause (ii), for the words and figures “sections 122, 125, 129 and 130”, the words and figures “sections122 and 125” shall be substituted.
Amendment of section 75.
In section 75 of the Central Goods and Services Tax 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.’.
Section 75 deals with provision related to determination of Tax and under sub section 12 it has clarified meaning of self-assessed tax which will include details furnished for outward supplied u/s 37 (e.g. GSTR-1) but doesn’t include return furnished u/s 39 (e.g. ISD returns)
Amendment of section 83.
In section 83 of the Central Goods and Services Tax Act, for sub-section (1), the following sub-section shall be substituted, namely: ––
“(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.”.
This provision mainly cover cases where person either supply without raising invoices or raise invoices without making actual supply, takes or utilize input in contravention of the GST law etc. Here commissioner has been given ample power to attach their property which includes bank account and other belongings.
Amendment of section 107.
In section 107 of the Central Goods and Services Tax Act, in sub-section (6), 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.”.
In case of detention or seizure one has to pay 25% of the penalty before moving to appeal. Earlier it was only 10%. Earlier it was 10% of disputed tax maximum of 25 Crores.
One more important change if we correlate it with section 129 (i..e. for Detention ,seizure and release of goods and conveyance in transit) where penalty has been increased to 200%. Meaning thereby one has to pay 50% of the tax amount which is very high.
Amendment of section 129.
In section 129 of the Central Goods and Services Tax Act, ––
(i) in sub-section (1), for clauses (a) and (b), the following clauses shall be substituted, namely:––
“(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;
Very bad for industry as penalty has been increased to 200% of tax payable in case of Detention, seizure and release of goods and conveyance in transit.
(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;”;
(ii) sub-section (2) shall be omitted;
In sub section 2 there was a facility to get released goods on furnishing of Bond and security as mentioned in section 67(6). Now this has been withdrawn.
(iii) for sub-section (3), the following sub-section shall be substituted, namely:––
“(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).”;
(iv) in sub-section (4), for the words “No tax, interest or penalty”, the words “No penalty” shall be substituted;
Opportunity of being heard is restricted to penalty only. They cans levy tax and interest without giving any opportunity of being heard.
(v) for sub-section (6), the following sub-section shall be substituted, namely:––
“(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.”.
Amendment of section 130.
In section 130 of the Central Goods and Services Tax Act,––
(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.
On Confiscation of goods or conveyance penalty has been fixed to 100% of tax payable
Substitution of new section for section 151.
For section 151 of the Central Goods and Services Tax Act, the following section shall be substituted, namely: ––
“151. 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.”.
Earlier provision was of “Power to collect Statistics” now replaced with new provision “Power to call for information”. Again ample power has been given to The commissioner or an officer authorized to call information from any person in manner and form specified by them.
Amendment of section 152.
In section 152 of the Central Goods and Services Tax 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;
Now department can publish/use Individual return or part of their return without giving any opportunity of being heard to the concerned person for any proceedings under this act.
(b) sub-section (2) shall be omitted.
Restriction on see or have access to information of any individual return u/s 151 has been omitted. Now they can access such information for the purpose of collection of data or computerization without any restriction.
Amendment of section 168.
112. In section 168 of the Central Goods and Services Tax 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.
The Board has been given wide power related to section 44 i.e. Annual return. Earlier it was restricted to 44(1) only. Here commissioner or Joint commissioner on approval of Board can exercise such power.
Amendment to Schedule II.
In Schedule II of the Central Goods and Services Tax Act, paragraph 7 shall be omitted and shall be deemed to have been omitted with effect from the 1st day of July, 2017.
Paragraph 7 related to supply of goods by any unincorporated association or body of person to a member for cash/deferred payment or any other valuable consideration has been omitted. This was also omitted as they have already covered this by making amendment to section 7 as mentioned above.
Integrated Goods and Services Tax
Amendment of section 16.
In the Integrated Goods and Services Tax Act, 2017, in section 16, ––
- in sub-section (1), in clause (b), after the words “supply of goods or services or both”, the words “for authorized operations” shall be inserted;
Earlier supply made to SEZ unit or SEZ developer treated as “Zero rated supply” and was also eligible for refund. Now this has been changed, one has to look into list of authorized supply for SEZ unit and SEZ developer to claim as “Zero rated Supply”.
(b) for sub-section (3), the following sub-sections shall be substituted, namely:––
“(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 sub-section 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.”.
Applicable to export of goods only. Realization of Foreign currency within time frame of FEMA has been added here and in case one has not received any payment then person must deposit the refund amount within 30 days of expiry of such time limit.
Sub section 4 is new provision inserted where govt has retained power to notify class of person and class or goods or services which may be exported on payment of IGST and one can claim refund as well.
Relevant changes in Custom for exporters
“154C. The Board may notify a common portal, to be called the Common Customs Electronic Portal, for facilitating registration, filing of bills of entry, shipping bills, other documents and forms prescribed under this Act or under any other law for the time being in force or the rules or regulations made thereunder, payment of duty and for such other purposes, as the Board may, by notification, specify.”.
Very good move, now we will have separate portal called “Common Custom Electronic Portal “for compliance purpose.
After section 114AB of the Customs Act, the following section shall be inserted, namely:––
‘114AC. Where any person has obtained any invoice by fraud, collusion, willful misstatement or suppression of facts to utilise input tax credit on the basis of such sinvoice for discharging any duty or tax on goods that are entered for exportation under claim of refund of such duty or tax, such person shall be liable for penalty not exceeding five times the refund claimed.
Explanation.––For the purposes of this section, the expression “input tax credit” shall have the same meaning as assigned to it in clause (63) of section 2 of the Central Goods and Services Tax Act, 2017.’.
Important change, penalty for fraudulent utilisation of input tax for claiming refund increased to 5 times of refund under Custom act.
Disclaimer- This document has been prepared entirely for internal use. Although utmost care has been taken to prepare this document and observations, but it is still advisable to confirm from expert before moving further or taking action based on this document. Author will not in any way liable for any such action taken by reader.