On 01.02.2021, the Hon’ble Finance Minister Smt. Nirmala Sitharaman presented Finance Bill, 2021 and accordingly some changes have been proposed in Indirect Tax Law. All the changes in rate of tax shall take effect from the midnight of 1st of February 2021, unless otherwise stated. Whereas, all the amendments in the finance Bill 2021 will come into force from the date of notification issued by the authority.
CHANGES IN GST LAW:
a) Section 7 of the CGST Act, 2017– A new clause (aa) in sub-section (1) inserted retrospectively with effect from 01.07.2017 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.
b) Section 16 of the CGST Act, 2017– A new clause (aa) to sub-section (2) of the section 16 of the CGST Act has been inserted to provide that input tax credit on invoice or debit note may be availed only when the details of such invoice or debit note have been furnished by the supplier in the statement of outward supplies.
c) Section 35 of the CGST Act, 2017– Section 35 (5) is being omitted to remove the mandatory provision of getting annual accounts audited.
d) Section 44 of the CGST Act, 2017– Section 44 substituted to remove the mandatory requirements of furnishing of reconciliation statement duly audited by professional and it provide provision of annual return on self-certification basis.
e) Section 50 of the CGST Act, 2017– The section retrospectively to charge interest on net cash liability from 01.07.2017.
f) Section 74 of the CGST Act, 2017– Section 74 is being amended to clear that seizure and confiscation of goods and conveyances in transit a separate proceeding from recovery of tax.
g) Section 75 of the CGST Act, 2017– An explanation to sub-section (12) of section 75 of the CGST Act is being inserted to clarify that “self-assessed tax” shall include the tax payable in respect of outward 32 supplies, the details of which have been furnished under section 37, but not included in the return furnished under section 39.
h) Section 83 of the CGST Act, 2017– It has been amended that provisional attachment shall remain valid for the entire period starting from the initiation of any proceeding under Chapter XII, Chapter XIV or Chapter XV till the expiry of a period of one year from the date of order made thereunder.
i) Section 129 of the CGST Act, 2017– This section is being amended to delink the proceedings to detention, seizure and release of goods and conveyances in transit, from the proceedings under section 130 relating to confiscation of goods or conveyances and levy of penalty.
j) Section 130 of the CGST Act, 2017– This section is being amended to delink the proceedings of section relating to confiscation of goods or conveyances and levy of penalty from the proceedings under section 129 relating to detention, seizure and release of goods and conveyances in transit.
k) Section 151 of the CGST Act, 2017– The section is being substituted to empower the jurisdictional commissioner to call for information from any person relating to any matter dealt with in connection with the Act.
l) Section 152 of the CGST Act, 2017– The section is being amended as to provide no information obtained under sections 150 and 151 shall be used for the purposes of any proceedings under the Act without giving an opportunity of being heard to the concerned person.
m) Section 168 of the CGST Act, 2017– The section is being amended to enable the jurisdictional commissioner to exercise powers under section 151 to call for information.
n) The section 7 of the CGST Act, paragraph 7 of Schedule II to the CGST Act is being omitted retrospectively, with effect from the 1st July, 2017.
o) Section 16 of the IGST Act, 2017– (i) zero rate the supply of goods or services to a Special Economic Zone developer or a Special Economic Zone unit only when the said supply is for authorised operations; (ii) restrict the zero-rated supply on payment of integrated tax only to a notified class of taxpayers or notified supplies of goods or services; and (iii) link the foreign exchange remittance in case of export of goods with refund.
CHANGES IN CUSTOMS LAW.
a. An Agriculture Infrastructure and Development Cess (AIDC), as duty of customs has been proposed from 02.02.2021. The cess has been imposed on certain goods not all. The same are as under:
i) Apples -35%, ii) Crude Palm Oil- 17.5%, iii) Crude Soya-bean oil -20%, iv) Crude Sunflower seed oil- 20%., v) Peas (Pisum sativum)- 40%. vi) Kabuli Chana- 30%, vii) Bengal Gram (desichana)- 50%, viii) Chick Peas (garbanzos)- 50%, ix) Lentils (Mosur)- 20%, x) All goods (Wine)- 100%, xi) Vermouth and other wine of fresh grapes, flavoured- 100%, xii) Other fermented beverages for example, Cider, Perry, Mead, sake, mixture of fermented beverages or 50% 100% 26 fermented beverages and non-alcoholic beverages- 100%, xiii) All goods (Brandy, Bourbon whiskey, Scotch etc.)- 100%, xiv) Various types of coal- 1.5%, xv) Lignite, whether or not agglomerated- 1.5%, xvi) Peat, whether or not agglomerated- 1.5%, xvii)Urea- 5%, xviii) Ammonium nitrate- 5%, xix) Muriate of potash, for use as manure or for the production of complex fertilisers- 5%, xx) Diammonium phosphate, for use as manure or for the production of complex fertilisers- 5%, xxi) Cotton (not carded or combed)- 5%, xxii) Silver (including imports by eligible passengers)- 2.5%, xxiii) Silver Dore- 2.5%, xxiv) Gold (including imports by eligible passengers) – 2.5%, xxv)Gold Dore- 2.5%.
ii) An agriculture Infrastructure and Development Cess (AIDC) of Rs 2.5 per litre has been imposed on petrol and Rs 4 per litre on diesel as an additional duty of excise.
iii) Section-25 Customs Act, 1962- The section amended to prescribe all conditional exemptions, unless otherwise specified or varied or rescinded, given under Customs Act shall come to an end on 31st March falling immediately two years after the date of such grant or variation. Further, all existing conditional exemptions in force as on the date on which the Finance Bill 2021 receives the assent of the President unless having a prescribed end date, shall come to an end on 31st March, 2023 (if not specifically extended/ rescinded earlier) on review.
iv) Section 38BB of the Customs Act, 1962- A new section 28BB is being introduced prescribing a two-year time-limit in issuance of a notice under section 28 of the Customs Act, 1962.
v) Section 46 of the Customs Act, 1962-
Sub section (3) of section 46 is being amended so as to
a. mandate filing of bill of entry before the end of the day preceding the day (including holidays) of arrival of goods.
b. A new proviso is being introduced therein, to enable the Board to notify the time period for presenting bill of entry in certain cases as it may deem fit.
vi) Section 110 of the Customs Act, 1962- The section amended to revise the procedure for pretrial disposal of seized gold, in any form.
Vii) Section 113 of the Customs Act, 1962- Sub-section (ja) is being added to section 113 to provide for the confiscation of any goods entered for exportation under claim of remission or refund of any duty or tax or levy, so as to make a wrongful claim in contravention of the provisions of the Customs Act, 1962 or any other law for the time being in force.
viii) Section 114AC- This section inserted in the Act to prescribe penalty in specific case where any person has obtained any invoice by fraud, collusion, willful misstatement or suppression of facts to utilize Input Tax Credit on the basis of such invoice for discharging any duty or tax on goods that are entered for exportation under claim of refund of any duty or tax.
ix) Section 153 is being amended so as to insert a new clause ‘(ca)’ under sub section (1) thereof so as to enable service of order, summons, notice, etc. by making it available on the common portal.
x) A New Section 154C has been inserted for notification of a common portal for facilitating registration, filing of bills of entry, shipping bills.