Detailed Analysis of Proposed Amendments in GST Act- Budget 2020

(a) the Andaman and Nicobar Islands;

(b) Laksha-dweep;

(c) Dadra and Nagar Haveli;

(d) Daman and Diu;

(e) Chandi-garh and

(f) other territory.

“(c) Dadra and Nagar Haveli and Daman and Diu;

(d) Ladakh;”.

(a) the Andaman and Nicobar Islands;

(b) Laksha-dweep;

(c) Dadra and Nagar Haveli and Daman and Diu; (d) Ladakh;

(e) Chandigarh and

(f) other territory.

And

the Dadra and Nagar Haveli and Daman and Diu (Merger of Union Territories), Act, 2019.

-Ladakh added in list of Union Territories.

(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

(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

(i) supply of services not leviable to tax under the CGST Act, or

(ii) inter-State outward supply of services, or

(iii) outward supply of services through an eCommerce operator required to collect TCS u/s 52.

-Amend-ment required due to insertion of second Proviso to Sec. 10(1) by CGST (Amen-dment) Act, 2018 which included that persons rendering Services of value not exceeding 10% of turnover in preceding F.Y or 5 lakh which ever is higher can opt for Compo-sition u/s 10(1).

-To come in line with the said amendment, the word “or services” has been inserted i.e. Person supplying Exempt Services, Interstate supply of services, Services provided through E-Commerce Operator, will be excluded from the purview of Section 10(1) and cannot opt for Composition.

Benevolent Amend-ment

The same can be explained through the help of illustrations:

(Linked to Invoice dated 01-03-2019)

Invoice Linkage became irrelevant

(Linked to Invoice dated 01-03-2019)

Invoice Linkage became irrelevant

The credit which was earlier not getting availed for Debit notes issued after 6 months from end of Financial Year to which Invoice pertains to will now be available.

4.

Section 29 (1)(c) (Cance-llation of Regist-ration)

(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.

“(c) the taxable person is no longer liable to be registered under section 22 or section 24 or intends to opt out of the registration voluntarily made under sub-section (3) of section 25:”

“(c) the taxable person is no longer liable to be registered under section 22 or section 24 or intends to opt out of the registration voluntarily made under sub-section (3) of section 25

Clause (c) of sub-section (1) of section 29 of the CGST Act is being amended to provide for cancellation of registration power to Proper Officer suo moto or on application, where the Registration has been obtained voluntarily under sub-section (3) of section 25.

Earlier the section did not empower the proper officer to cancel the voluntary registration of person registered under section 25
(3). By deletion of words “other than” and making requisite changes in section 29(1)(c) the power is now granted.

5.

Section 30 (1)-Proviso subst-ituted (Revo-cation of Cance-llation)

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 31.03.2019, shall be allowed to file application for revocation of cancellation of the registration not later than 22.07.2019.(Inserted by 5^th ROD Order,2019)

In section 30 of the Central Goods and Services Tax Act, in sub-section (1), for the proviso, the following proviso shall be substituted, namely:–– “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).

“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 Commi-ssioner, as the case may be, for a period not exceeding thirty days;

(b) by the Commi-ssioner, for a further period not exceeding thirty days, beyond the period specified in clause (a).”

A proviso to sub-section 1 of section 30 of the CGST Act is being inserted to empower the jurisdictional tax authorities to extend the date for application of revocation of cancellation of registration in deserving cases.

Before amendment the period of 30 days from date of service of cancellation order was available to apply for revocation of cancellation. i.e. when 30 days use to expire the cancellation could not be revoked.

After the amendment the powers given to jurisdi-ctional

a) Additional Commi-ssioner or the Joint Commi-ssioner to extend the period by 30 days i.e. (Max days=30+30)

b) Commi-ssioner, for a further period not exceeding thirty days i.e (Max days= 30 + 30+ 30)

On Reasons recorded in writing and on sufficient cause being shown.

6.

Section 31 (2)-Proviso substi-tuted

(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 recomme-ndations 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.

“Provided that the Government may, on the recomm-endations 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.”

(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 recomm-endations 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.”.

Section 31(2) proviso of the is being amended to provide enabling provision to prescribe the manner of issuance of invoices in case of supply of taxable services.

Enabling provisions for giving power to Government to specify category of services for issuance of Tax Invoice within prescribed time and manner.

(The clause will be practically more unders-tandable on issuance of related Notifications, as the government trying to cover invoicing issues of Service Sector e.g Banks etc.)

7.

Section 51 (3) and section 51 (4) (Tax Deduction at Source Certificate)

(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.

(3) A certificate of tax deduction at source shall be issued in such form and in such manner as may be prescribed.

(4) shall be omitted.

(3) A certificate of tax deduction at source shall be issued in such form and in such manner as may be prescribed.

(4) Omitted

Section 51 of the CGST Act is being amended to remove the requirement of issuance of TDS certificate by the deductor;

And

to omit the corresp-onding provision of late fees for delay in issuance of TDS certificate.

New Rules for Issuance of Tax deduction Certificate to be prescribed, penalty for non issuance clause deleted.

8.

Section 109 (6)

(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.

(a) the words “except for the State of Jammu and Kashmir” shall be omitted;

(b) the first proviso shall be omitted.

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:

Section 109 of the CGST Act is being amended to bring the provision for Appellate Tribunal under the CGST Act in the Union territory of Jammu and Kashmir and Ladakh.

Amended to bring into force of the Jammu and Kashmir Reorgani-zation Act, 2019

J&K under normal CGST Appellate Tribunal.

9.

Section 122 (1A) inserted Penalties

(1) Where a taxable person who––

(i) supplies any goods or services or both without issue of any invoice or issues an incorrect or false invoice with regard to any such supply;

(ii) issues any invoice or bill without supply of goods or services or both in violation of the provisions of this Act or the rules made thereunder;

(iii) to (vi) ……

(vii) takes or utilises input tax credit without actual receipt of goods or services or both either fully or partially, in contra-vention of the provisions of this Act or the rules made thereunder;

(viii)…….

(ix) takes or distributes input tax credit in contrav-ention of section 20, or the rules made thereunder;

“(1A) Any person who retains the benefit of a transaction covered under clauses (i), (ii), (vii) or clause (ix) of sub-section (1) and at whose instance such transaction is conducted, shall be liable to a penalty of an amount equivalent to the tax evaded or input tax credit availed of or passed on.”

“(1A) Any person who retains the benefit of a transaction covered under clauses (i), (ii), (vii) or clause (ix) of sub-section (1) and at whose instance such transaction is conducted, shall be liable to a penalty of an amount equivalent to the tax evaded or input tax credit availed of or passed on.”

Section 122 of the CGST Act is being amended by inserting a new sub-section to make the beneficiary of the transa-ctions of passing on or availing fraudulent Input Tax Credit liable for penalty similar to the penalty leviable on the person who commits such specified offences.

Amendment made to curb the practice of Fake Invoicing, the mediator / beneficiary also held liable with same degree of offence as Supplier or Receiver or Transporter or Warehouser etc. A word of Caution for all!

e.g Practice was followed to convert Cash Sale Bills to make some other person take input tax credit against those invoices by amending the bills, without actual supplying goods/ services /both. Now, the person supplying amended bills, person availing credit and the person facilitating the same, all will be held liable for penal provisions.

10.

Section 132 (1) Punish-ment

132. (1) Whoever commits any of the following offences, namely:—

(a) supplies any goods or services or both without issue of any invoice, in violation of the provisions of this Act or the rules made there under, with the intention to evade tax;

(b) issues any invoice or bill without supply of goods or services or both in violation of the provisions of this Act, or the rules made thereunder leading to wrongful availment or utilisation of input tax credit or refund of tax;

(c) avails input tax credit using such invoice or bill referred to in clause (b);

(d) collects any amount as tax but fails to pay the same to the Government beyond a period of three months from the date on which such payment becomes due;

(e) evades tax, fraudulently avails input tax credit or fraudulently obtains refund and where such offence is not covered under clauses (a) to (d);

(i)for the words “Whoever commits any of the following offences”, the words “Whoever commits, or causes to commit and retain the benefits arising out of, any of the following offences’’ shall be substituted;

(ii) for clause (c), the following clause shall be substituted, namely:––

“(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;”;

(iii) in sub-clause (e), the words “, fraudulently avails input tax credit” shall be omitted.

132. (1) Whoever commits, or causes to commit and retain the benefits arising out of, any of the following offences, namely:—

(a) supplies any goods or services or both without issue of any invoice, in violation of the provisions of this Act or the rules made there under, with the intention to evade tax;

(b) issues any invoice or bill without supply of goods or services or both in violation of the provisions of this Act, or the rules made thereunder leading to wrongful availment or utilisation of input tax credit or refund of tax;

(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;

(d) collects any amount as tax but fails to pay the same to the Government beyond a period of three months from the date on which such payment becomes due;

(e) evades tax or fraudulently obtains refund and where such offence is not covered under clauses (a) to (d);

Section 132 of the CGST Act is being amended to make the offence of fraudulent availment of input tax credit without an invoice or bill a cognizable and non-bailable offence; and to make any person who commits, or causes the commission, or retains the benefit of transactions arising out of specified offences liable for punishment.

This amendment has two aspects:

1) causes to commit and retain the benefits arising out of

Covers the Beneficiary /mediator being held liable with same degree of offence as Supplier or Receiver

2) (ii) for clause (c), the following clause shall be substi-tuted, namely:-

“(c) avails input tax credit using the invoice or bill referred to in clause (b) or fraud-ulently avails input tax credit without any invoice or bill;”;

(iii) in sub-clause (e), the words “, fraudu-lently avails input tax credit” shall be omitted.

Shifting of Fraudulent Availment of Input Tax Credit from (e) to (c) -Impact —

Offence made cognizable and non-bailable offence, at par with the supply without invoice or fake invoice issuing provisions

Before Amendment the Fradulent availment of Input Tax Credit was Non cognizable and bailable.

A word of caution for taking Any Other ITC in 3B returns without billing in support of it subject to Limits prescribed in Section 132(1) is punishable as Non cognizable and bailable offence.

11.

Section 140 (1),

Section 140 (2),

Section 140 (3),

Section 140 (5),

Section 140 (6),

Section 140 (7),

Section 140 (8),

Section 140 (9)

(Transi-tional Credit Provi-sions)

140. (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 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:

(1), after the words “existing law”, the words “within such time and” shall be inserted and shall be deemed to have been inserted;

(2), after the words “appointed day”, the words “within such time and” shall be inserted and shall be deemed to have been inserted;

(3), for the words “goods held in stock on the appointed day subject to”, the words “goods held in stock on the appointed day, within such time and in such manner as may be prescribed, subject to” shall be substituted and shall be deemed to have been substituted;

(5), for the words “existing law”, the words “existing law, within such time and in such manner as may be prescribed” shall be substituted and shall be deemed to have been substituted;

(6), for the words “goods held in stock on the appointed day subject to”, the words “goods held in stock on the appointed day, within such time and in such manner as may be prescribed, subject to” shall be substituted and shall be deemed to have been substituted;

(7), for the words “credit under this Act even if”, the words “credit under this Act, within such time and in such manner as may be prescribed, even if” shall be substituted and shall be deemed to have been substituted;

(8), for the words “in such manner”, the words “within such time and in such manner” shall be substituted and shall be deemed to have been substituted;

(9), for the words “credit can be reclaimed subject to”, the words “credit can be reclaimed within such time and in such manner as may be prescribed, subject to” shall be substituted and shall be deemed to have been substituted.

(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 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:

………

Section 140 of the CGST Act is being amended w.e.f. 01.07.17, to prescribe the manner and time limit for taking transitional credit

Retrospective Amendment w.e.f 01.07.2017 to overcome the effect of Judgements like Sidhartha Enterprises etc. allowing Transitional Credit based upon the ground that Rules cannot provide the Time Limit when in Act, there is No Time Frame Provided.

Procedural amendment in Act in Sections 140(1), (2),(3),(5),(6),(7),(8),(9) to include provision for Time Frame for Transitional Credit to be provided by Rules.

12.

Section 168 (2) Power to issue Instruc-tions

(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 (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.

In section 168 of the Central Goods and Services Tax Act, in sub-section (2), for the words, brackets and figures “sub-section (5) of section 66, sub-section (1) of section 143”, the words, brackets and figures “sub-section (1) of section 143, except the second proviso thereof” shall be substituted.

(2) The Commi-ssioner 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 (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 Commi-ssioner or Joint Secretary posted in the Board and such Commi-ssioner or Joint Secretary shall exercise the powers specified in the said sections with the approval of the Board.

Section 168 of the CGST Act is being amended to make provisions for enabling the jurisdictional commissioner to exercise powers under sub-section (5) of section 66 and second proviso to sub-section (1) of section 143.

For Sec. 66(5) [Special Audit Fee]and Sec. 143(1) [Job work Procedure] jurisdictional commi-ssioner to exercise powers, no approval of the Board required.

13.

Section 172 (1)

(1) If any difficulty arises in giving effect to any provisions of this Act, the Government may, on the recomme-ndations 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 there under, 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.

(1), in the proviso, for the words “three years”, the words “five years” shall be substituted.

(1) If any difficulty arises in giving effect to any provisions of this Act, the Government may, on the recomme-ndations 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 there under, 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.

Section 172 of the CGST Act is being amended to make provision for enabling issuance of removal of difficulties order for another 2 years, i.e. till five years from the date of commen-cement of the said Act.

Removal of difficulties order issuance time period for another 2 years in totality 5 years from the date of comme-ncement of the said Act extended.

14.

Schedule II

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;

In Schedule II to the Central Goods and Services Tax Act, in paragraph 4, the words “whether or not for a consideration,” at both the places where they occur, shall be omitted and shall be deemed to have been omitted with effect from the 1st day of July, 2017.

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;

Entries at 4(a) & 4(b) in Schedule II of the CGST Act is being amended w.e.f. 01.07.2017 to make provision for omission of supplies relating to transfer of business assets made without any consideration from Schedule II of the said Act.

The Retrospective Amendment w.e.f 01.07.2017 is brought to be in line with Amendment made by CGST Amendment Act, 2018 which inserted after section 7(1A) after Section 7 (1), stating that Schedule II does not specify whether the Activity is supply or not, but once it is held as Supply by Section 7(1), be classified into SUPPLY OF GOODS OR SUPPLY OF SERVICES.

Hence, this amendment.

Proviso

Proviso