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As the day progresses we professionals are going through lot of GST amendments, circulars, notifications etc .and yet we are finding it how to make it good and simple tax for our clients .In this budget, the main focus of government was to collect tax overruling all previous supreme court judgments or high courts judgements.

Amendment in Section 7 of CGST Act, 2017

Clause 99 of the bill proposes to amend section 7 of the act i.e. the term supply by inserting a new clause (aa) in sub section 1 with retrospective effect from 1st july,2017 ,so as 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 has also inserted an explanation stating the term person and its members or constituents will be treated as two distinct person and hence, any the activities or transactions between them will deemed as supply between two separate persons.

This has resulted in overruling of judgment of supreme court judgement in case of Calcutta sports club related to service tax era which was based on the doctrine of mutuality which stated that if there are no members there will be no club and vice-versa. Hence,the decision was that the clubs are not entitled to charge, collect and pay service tax on any services made to members. The Jharkhand high court also gave similar ruling in case involving Ranchi Club.

Amendment in Section 16 of CGST Act, 2017

Clause 100 of the bill seeks amendment in section 16 by inserting a new clause (aa) in sub section (2) thereof. It provides for 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.

Now, Rule 36(4) which has been introduced will lose its validity as the invoices which has been shown in GSTR 1 the recipient can avail credit up to 120 percent of invoices reflected in his GSTR 2A.This rule has been amended to provide for 110 percent and subsequently, to 105 percent of invoices as reflected in GSTR 2A of recipient. One can argue that the amendment is done in act to support the rule 36(4). But as we are making 100 percent of invoices to be uploaded by supplier in GSTR 1 within time and 100 percent of the same to be reflected in GSTR 2A of recipient then where is the question of looking at Rule 36(4) when it is already added as a condition in section 16.

As a recipient, today there is one condition out of four as mentioned in section 16 which is difficult to be complied by him. The condition of payment of taxes by supplier to government is an impossible task on the part of recipient as how does he come to know that the supplier has paid taxes to government or not. The mistake of one can not be put on any other person. The new amendment proposed will certainly put more complexity in trade and commerce for complying with provisions of GST.

Amendment in Section 35 and Section 44 of CGST Act, 2017

Clause 101 of the bill seeks to omit sub section(5) of the section 35 to remove the mandatory requirement of getting annual accounts audited and the reconciliation statement submitted by specified professional. Clause 102 of bill seeks to substitute a new section for section 44 of CGST Act to remove mandatory requirement of furnishing a reconciliation statement duly audited by specified professional and to provide for filing of 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.

There will be no applicability of GSTR 9C now. But as per clarification issued by CBIC in its twitter that there will be applicability of GSTR 9C for FY 2019-20 and as the bill will be enacted after some time so there are chances of applicability for GSTR 9C for FY 2020-21 also.

Amendment in Section 50 of CGST Act, 2017

Clause 103 of the bill seeks to amend section 50 of the CSGT act to substitute proviso to sub section(1) with retrospective effect from 1st july,2017.Now, the interest has to be paid on net tax liability provided the person has not been issued any show cause notice under section 73 or section 74.

Still, there will be litigation as the tax deposited in electronic cash ledger before the due date of filing of return will still be the point of dispute .As the credit lying in electronic credit ledger and treated as an advance tax .The Cash lying in electronic cash ledger before the due date of filing of return should also be treated as an advance tax. As we all know part payment of tax in filing of return is not allowed in GST. There were many show cause notices issued asking to pay GST on gross tax liability still many disputes will be resolved and very welcome and long awaited amendment done in this budget by the government.

The taxpayers to avoid any litigation must file the return on time and even if there is some delay they must pay tax along with interest on net tax liability so as to avoid any litigation. If there is any issue of SCN u/s 73 or 74,then this proviso will not apply and taxpayer has to pay tax on gross tax liability

Amendment in Section 74, 129 & 130 of CGST Act, 2017

The seizure and confiscation of goods and conveyance in transit a separate proceeding from recovery of tax. At the end of the section there is an explanation 1,in clause (ii) which makes reference to 4 sections namely sec.122,125,129 and 130.Now from the budget the sections 129 and 130 have been deleted so making them a independent proceeding under the act. Section 129 relates to detention, seizure and release of goods and conveyance in transit and section 130 relates to confiscation of goods or conveyance and levy of penalty. Apart from section 74,these two section have also been delinked with each other with this bill. Also wherever there is any reference to any tax or interest in these two sections this bill proposes to delete it making these two sections a penalty section.

Amendment in Section 75 of CGST Act, 2017

Clause 105 of this bill seeks to insert an explanation in sub section (12) of section 75 of CGST act ,to clarify “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 states where there is any self assessed tax, then it can be recovered without issuing show cause notice and the recovery proceedings under section 79 can be directly invoked. It has widen the scope of self assessed tax. Now, if the turnover as per GSTR 1 is shown more as compared to the outward supplies shown in GSTR 3B due to any reason for e.g. shortage of funds etc. then also the provisions of section 79 can be directly invoked without issuing show cause notice.

Amendment in Section 83 of CGST Act, 2017

In this section sub section 1 has been substituted whish states 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 government revenue it is necessary to do ,he may, by order in writing, attach provisionally ,any property, including bank account belonging to the taxable person or any person specified under subsection (1A) of section 122,in such manner as may be prescribed.

This amendment is regarding attachment of property of not only the taxable person but also of the person who by any means retains the benefit of the transaction. This is a good move by the government considering the amount of fake invoice cases and availment of fake ITC.

Amendment in Section 107 of CGST Act, 2017

This provision relates to appeal to appellate authority. Earlier for filing an appeal under section 129(3),  10 percent has to be deposited of the disputed tax amount by the appellant, now from this finance bill the amount to be deposited is 25 percent of disputed amount.

Amendment in Section 129 of CGST Act, 2017

In this provision, clauses (a) and (b) has been substituted which penalty is segregated on basis of where owner comes forward to claim goods and where owner does not comes to claim .In clause (a) in case of taxable goods,t he penalty of 100 percent of tax payable on such goods is applicable whereas in case of exempted goods, on an amount equal to two percent of value of goods or twenty five thousand rupees whichever is less.

Clause(b) is where owner does not comes forward for claim of goods. In case of taxable goods, penalty equal to fifty percent of value of goods or two hundred percent of tax payable on such goods, whichever is higher and in case of exempted goods, an amount equal to five percent of value of goods or twenty five thousand rupees whichever is less.

Sub section(2) has been omitted which provides for security to be given in case of provisional release based on similar lines of section 67(6).

Sub section(3) has been substituted which state proper officer after detaining or seizing goods or conveyance shall issue a notice within seven days of seizure or detention specifying the penalty payable and pass an order within seven days from date of service of such notice for payment of penalty as mentioned in clause (a) or clause(b) of sub section (1).

Amendment in Section 130 of CGST Act, 2017

In the second proviso in this section the amount of penalty as provided under section 129(1) has been substituted as penalty equal to 100 percent of tax payable on such goods.

As earlier both section 129 and 130 provided for 200 percent of tax payable on such goods now this budget has made these two section as a penalty provision which states 100 percent of tax payable will be the penalty payable towards detention, seizure or confiscation of goods or conveyance and the reference of tax and interest has been deleted.

Amendment in Section 152 of CGST Act, 2017

As this provision relates to publish of information related to any individual return given for any matter given for the purpose of section 150 or 151 of the act should be given without previous written consent of the concerned individual or his authorised representative. It can be used for any proceedings of the act but now words has been inserted as without giving an opportunity of being heard to the person concerned. Hence, here the principle of natural justice is introduced in this section.

Amendment in Section 16 of IGST Act, 2017

In this section now supply of goods or services is to be used for authorised operations only then refund will be given and he will be eligible under this section.

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 LUT in accordance with the provisions of section 54 of CGST Act or rules made thereunder. Now, the option of payment route is now being discontinued except for certain category of person to be notified by government. The payment route of IGST was beneficial for exporters as the refund of credit on capital goods was allowed which is not allowed under LUT method.

Also in case of non realisation of sale proceeds,the exporter has to deposit the refund amount along with interest as per section 50 of the act within 30 days from the expiry of period prescribed under FEMA Act,1999 for receipt of foreign remittances in such manner as may be prescribed.

In sub section (4),the government may notify certain class of person who can make zero rated supply or export on payment of Integrated tax and claim the refund of tax so paid.


 We have now completed three years of journey from the introduction of GST in the country. Yet we are unable to make it good and simple to the taxpayers at large. The complexity is increasing with each passing day.The lawmakers are right in making the law not easy for fraudsters but they should also think about honest taxpayers also while making the law complex.

Source:The Finance Bill,2021 and Memorandum Explaining the Provisions in the Financial Bill.

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  1. CA DISHA SEHAGL says:

    Great writing and precise information!
    In reference to the amendment proposed in Section 16 vide insertion of clause aa, one can argue that rule 36(4) was ultra vires then! As a professional I fail to understand how is GST good and simple tax???
    On one hand they are making sure that you declare your outward supplies adequately and pay correct tax otherwise Prov attachment and Cancellation of GST No.( even without SCN) can be done! On other hand they are also restricting claim of ITC!!
    What does this Govt. and Ministry wants is out of my understanding!

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May 2024