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1. Section 7 – Scope of Supply

Schedule II Activities to be treated as Supply of Goods or Supply of Services

Supply of Goods or Services provided by any Association or any person other than an individual to its members for consideration will be considered as supply and person or Association shall be treated as separate persons under the provisions of CGST Act, 2017. In other words, supplies made by Clubs, Associations etc. to their members are taxable supplies.

Overruling the Judgement of Hon’ble SC in Calcutta Club in the erstwhile service tax regime.

2. Section 16- Eligibility of Input Tax Credit

 In order to avail ITC, Supplier needs to furnish GSTR-1 and details of Invoices or Debit notes / Credit notes related to the same should mandatorily be reflected in GSTR-2A/2B of Recipient.

The constitutional validity and vires of Section 16(2)(c ) is already been challenged in various Courts.

In simpler words, Rule 36(4) has now been given legal backing

3. Section 35- Accounts Records

 Government has proposed to remove the mandatory requirement of conducting GST Audit by a CA/ CMA. Omission of Section 35(5)

4. Section 44- Annual Return

 Now, the taxable person as referred in sub section 1 excluding any Department of the Central Government or a State Government or a local authority whose accounts are required to be audited by CAG may furnish an annual return (GSTR 9) including self -certified reconciliation statement (GSTR 9C) reconciling supplies during the financial year along with audited annual financial statement. However, commissioner may exempt any class of registered person from the above provision.

Now the responsibility of the reconciliation is on the tax payer and not the auditor.

5. Section 44- Annual Return

 The due date for filing the Annual Return and reconciliation statement (unaudited) has been kept open.

6. Section 50- Interest on delayed payment of tax

Interest on tax has to be paid only on the tax deposited through electronic cash ledger w.e.f. 1st July, 2017. Various contradictions were there and a clarification was issued in August 2020, now a legal backing has been given.

7. Section 74- Determination of tax not paid or short paid or erroneously refunded

In case of detention or seizure of goods, now all proceedings will remain intact even if the main person liable to pay tax has discharged his liability and proceedings against him have been concluded.

The proceedings under Section 73, 74, 122, 125 will be concluded but the penalty proceedings under section 129, 130 shall continue.

8. Section 75- General Provisions for tax determination

 Self-assessed tax shall include tax payable w.r.t. Gstr 1. Recovery under section 79 can be initiated if liability disclosed in GSTR 1 is higher than the liability paid in GSTR-3B.

Now, Recovery can be initiated for Section 39 return and outward supply statement filed under Section 37 also.

9. Section 83- Provisional attachment to protect revenue

Provisional Attachment of property has been enhanced to a greater extent by including any proceedings under Assessment; Inspection, Search, Seizure and Arrest; Demand and Recovery.

The non-compliances like not issuing tax invoices, issuing tax invoices not as per GST provisions, utilizing itc without physical receipt of goods, distributing itc not as per the provisions of GST Act.

Even a proceeding under Section 71 empowers the govt officer to attach the property or bank accounts.

10. Section 107- Appeals to appellate authorities

In case of detention or seizure of goods or conveyance, appeal can be filed only after paying sum equal to 25% of the penalty.

The previous limit of 10% is now increased to 25% pre-deposit of the penalty amount.

11. Section 129(1) – Detention, seizure and release of goods and conveyances in transit

 Conditions for releasing detained or seized goods and conveyance in transit

Case I: – Where the owner of goods comes forward for payment of tax

 Taxable Goods: – Now, only penalty is to be paid equal to 200% of tax or

 Exempted goods: – Lesser of; 2% of value of goods or Rs. 25000.

Case II: – Where the owner of goods does not come forward for payment of tax

 Taxable Goods: Higher of penalty is to be paid equal to 200% of tax on such goods or 50% of the value of goods.

 Exempted goods: -Lesser of 5% of value of goods or 25000.

12. Section 129(2) – Detention, seizure and release of goods and conveyances in transit

Manner of Release of the goods or the conveyance detained by the tax officer

Now the penalty has to be paid in cash only by the taxpayer instead of security or execution of bond.

13. Section 129(3) – Detention, seizure and release of goods and conveyances in transit

Manner and proper time frame have been provided now.

Notice has to be issued by the proper officer within 7 days of detention or seizure specifying penalty payable and pass an order within 7 days from date of such notice.

If transporter fails to pay the amount of penalty within 15 days from date of receipt of order, Goods or conveyance will be confiscated and conveyance (not goods) shall be released only after paying lesser of penalty or Rs.1,00,000.

In case of perishable or hazardous goods, time limit may be reduced by the Proper Officer.

14. Section 129(4) – Detention, seizure and release of goods and conveyances in transit

 Only penalty shall be imposed for release of goods and conveyance and sufficient opportunity of being heard to be given to the concerned person.

15. Section 129(6) – Detention, seizure and release of goods and conveyances in transit

 The goods or conveyance detained or seized shall become liable to be sold or disposed off in the prescribed manner.

16. Section 130- Confiscation of goods or conveyances and levy of penalty

Penalty shall not be less than 100% of Tax payable on goods

17. Section 151- Power to call for information

The commissioner or an officer direct any person to furnish information relating to this act.

This information can now be used against any taxpayer/ any person, after giving an opportunity of being heard to the person submitting information under this section, in such form and in such manner, as may be specified therein.

18. Section 16(1) – Zero Rated Supply

Supply of goods/services to SEZ developer or unit will be considered as Zero-Rated Supply if the same are being provided for authorized operations only

According to SEZ Act, rules and other relevant notifications; authorised operations means as authorised by central government or authorised by development commissioner.

19. Section 16(3) – Zero Rated Supply

Now, there is restriction on availing refund of tax zero rated supplies “with payment of tax” unless and class of persons or class of goods or services, eligible to take such alternative are specifically notified by the government on the recommendation of the council.

Now, most of the exporters will have to claim refund under LUT scheme unless they are declared as a Class of Persons eligible for making exports under “With Payment of Tax” category.

In other words, as a general rule, Registered person making Zero rated supply is required to take refund of unutilized ITC under bond or letter of undertaking.

20. Section 16(3) – Zero Rated Supply

Linking of export proceeds with the zero-rated supply of goods.

If the sale proceeds are not received within the prescribed time limit, refund has to be returned again to government within 30 days from the date of expiry of time limit provided under FEMA, as per the prescribed manner, along with interest calculated under section 50.

Rule 96B has been given a legal backing.

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April 2024