Recent Amendments Under GST Effective From 01.02.2019, As Enacted Under CGST (Amendment) Act, 2018 & IGST (Amendment Act), 2018 And Notified Vide Notification No. 02/2019 Dt. 29.01.2019

Important Amendments In CGST Act

S. N.
What is amended ?
Amen-ded Section
Old Provision
Amendment in Act
Amendment in Rules
Effective Date of Amen-dment
Analysis
1
Definition of Adjudicating Authority
2 (4)
“adjudicating authority” means any authority, appointed or authorized to pass any order or decision under this Act, but does not include the Central Board of Excise and Customs, the Revisional Authority, the Authority for Advance Ruling, the Appellate Authority for Advance Ruling, the Appellate Authority and the Appellate Tribunal;
in clause (4 ),––
(i) for the words “Central Board of Excise and Customs”, the words “Central Board of Indirect Taxes and Customs” shall be substituted;
(ii) for the words “the Appellate Authority and the Appellate Tribunal”, the words, brackets and figures “the Appellate Authority, the Appellate Tribunal and the Authority referred to in sub-section (2) of section 171” shall be substituted;
01.02.2019
National Anti-Profiteering Authority is also excluded from definition of Adjudicating Authority
2
Definition of Business Vertical
2 (18)
(18) “business vertical” means a distingui-shable component of an enterprise that is engaged in the supply of individual goods or services or a group of related goods or services which is subject to risks and returns that are different from those of the other business verticals.
clause (18 ) shall be omitted;
Amendment is also made to rule 11
01.02.2019
Now, concept of “business vertical” is no more there since multiple registration is allowed for respective place of business is allowed in the same State.
Question – What is the course of action for person having single place of business and have 2 or more registrations as separate business vertical ?
3
Definition of Services
2 (102)
“services” means anything other than goods, money and securities but includes activities relating to the use of money or its conversion by cash or by any other mode, from one form, currency or denomination, to another form, currency or denomination for which a separate consideration is charged.
in clause (102 ), the following Explanation shall be inserted, namely:––
‘Explanation.––For the removal of doubts, it is hereby clarified that the expression “services” includes facilitating or arranging transactions in securities;’.
01.02.2019
‘Securities’ has been excluded from the definition of ‘goods’ and ‘services’, however, it is now been clarified by way of an explanation that facilitating or arranging transactions in securities is included in the definition of service and hence will be liable to GST. This has been clarified recently through a detailed FAQ on Banking and Insurance issued by CBEC.
4
Definition of Supply
7
(1) For the purposes of this Act, the expression “supply” includes––
(a) all forms of supply of goods or services or both such as sale, transfer, barter, exchange, licence, rental, lease or disposal made or agreed to be made for a consideration by a person in the course or furtherance of business;
(b) import of services for a consideration whether or not in the course or furtherance of business;
(c) the activities specified in Schedule I, made or agreed to be made without a consideration; and
(d) the activities to be treated as supply of goods or supply of services as referred to in Schedule II.
(2) Notwithstanding anything contained in sub-section (1),–
(a) activities or transactions specified in Schedule III; or
(b) such activities or transactions undertaken by the Central Government, a State Government or any local authority in which they are engaged as public authorities, as may be notified by the Government on the recomme-ndations of the Council, shall be treated neither as a supply of goods nor a supply of services.
(3) Subject to the provisions of sub- sections (1) and (2), the Government may, on the recommen-dations of the Council, specify, by notification, the transactions that are to be treated as-
(a) a supply of goods and not as a supply of services; or
In section 7 of the principal Act, with effect from the 1st day of July, 2017,––
(a) in sub-section (1), ––
(i) in clause (b), after the words “or furtherance of business;”, the word “and” shall be inserted and shall always be deemed to have been inserted;
(ii) in clause (c), after the words “a consideration”, the word “and” shall be omitted and shall always be deemed to have been omitted;
(iii) clause (d) shall be omitted and shall always be deemed to have been omitted;
(b) after sub-section (1), the following sub-section shall be inserted and shall always be deemed to have been inserted, namely:––
“(1A) where certain activities or transactions constitute a supply in accordance with the provisions of sub-section (1), they shall be treated either as supply of goods or supply of services as referred to in Schedule II.”;
(c) in sub-section (3), for the words, brackets and figures “sub-sections
(1) and (2)”, the words, brackets, figures and letter “sub-sections (1), (1A) and (2)” shall be substituted.
01.07.2017
The objective to amend Section 7 of the Act is to clarify the scope of supply; it Inserts a new sub-section (1A) in section 7 and omit clause (d) of sub-section (1). Now, first an activity has to be “supply” as per Section 7(1) only then it will be tested as per Sch II.
Question- Post this amendment, there may be cases where a transaction/ activity, although listed under Schedule-2, would not be “supply” as per section -7 ??
5
Levy of Tax
9(4)
(4) The central tax in respect of the supply of taxable goods or services or both by a supplier, who is not registered, to a registered person shall be paid by such person on reverse charge basis as the recipient and all the provisions of this Act shall apply to such recipient as if he is the person liable for paying the tax in relation to the supply of such goods or services or both.
Amendment of section 9(4)-
In section 9 of the principal Act, for sub-section (4), the following sub- section shall be substituted, namely:–
“(4) The Government may, on the recommen-dations of the Council, by notification, specify a class of registered persons who shall, in respect of supply of specified categories of goods or services or both received from an unregistered supplier, pay the tax on reverse charge basis as the recipient of such supply of goods or services or both, and all the provisions of this Act shall apply to such recipient as if he is the person liable for paying the tax in relation to such supply of goods or services or
01.02.2019
The objective to amend Section 9 of the Act empowering the Central Government is to notify classes of registered persons to pay the tax on reverse charge basis in respect of receipt of supplies of certain specified categories of goods or services or both from unregistered suppliers.
In view of this amendment only, the Central Govt. has rescinded N. No.8/2017 dt. 28.06.2017 which provides for exemption.
6
Composition Levy
10
(1) Notwith-standing anything to the contrary contained in this Act but subject to the provisions of sub-sections (3) and (4) of section 9, a registered person, whose aggregate turnover in the preceding financial year did not exceed fifty lakh rupees, may opt to pay, in lieu of the tax payable by him, an amount calculated at such rate as may be prescribed, but not exceeding,– (a) one per cent. of the turnover in State or turnover in Union territory in case of a manufacturer, (b) two and a half per cent. of the turnover in State or turnover in Union territory in case of persons engaged in making supplies referred to in clause (b) of paragraph 6 of Schedule II, and (c) half per cent. of the turnover in State or turnover in Union territory in case of other suppliers,
subject to such conditions and restrictions as may be prescribed: Provided that the Government may, by notification, increase the said limit of fifty lakh rupees to such higher amount, not exceeding one crore rupees, as may be recommended by the Council.
(2) The registered person shall be eligible to opt under sub-section (1), if–
(a) he is not engaged in the supply of services other than supplies referred to in clause (b) of paragraph 6 of Schedule II..
In section 10 of the principal Act,—
(a) in sub-section (1) —
(i) for the words “in lieu of the tax payable by him, an amount calculated at such rate”, the words, brackets and figures “in lieu of the tax payable by him under sub-section (1) of section 9, an amount of tax calculated at such rate” shall be substituted;
(ii) in the proviso, for the words “one crore rupees”, the words “one crore and fifty lakh rupees” shall be substituted;
(iii) after the proviso, the following proviso shall be inserted, namely:–– “Provided further that a person who opts to pay tax under clause (a) or clause (b) or clause (c) may supply services (other than those referred to in clause (b) of paragraph 6 of Schedule II), of value not exceeding ten per cent. of turnover in a State or Union territory in the preceding financial year or five lakh rupees, whichever is higher.”;
(b) in sub-section (2), for clause (a), the following clause shall be substituted, namely:––
“(a) save as provided in sub-section (1), he is not engaged in the supply of services;”.
Notification No. 8/2017 has been amended to provide that the rates at which the taxpayer registered under composition scheme will be in accordance with Rule 7 of the CGST Rules, 2017. Further, vide Notification No. 3/2019 – central tax, Rule 7 of the CGST Rules have been amended to provide that the tax payable by supplier eligible for composition scheme shall be at the rate of 0.5 percent of the turnover of taxable supplies of goods and services in the state.
1. Manufacturer- 0.5% of Turnover
2. Restaurant Service- 2.5% of Turnover
3. Other person- 0.5% of Turnover of taxable supplies of goods & services
01.02.2019
The objective to amend Section 10 of the Act so as to enhance the limit of composition levy from one crore rupees to one crore and fifty lakh rupees. By virtue of this amendment in the Act the power has been given to the Council to raise the threshold limit to Rs.1.5 Cr. However, it is important to note that the current threshold limit continues to remain at Rs.1 Cr to opt for the composition scheme.
Further Even if Composition dealers supply services of value not exceeding 10% of the turnover in the preceding financial year in a State/ Union territory or Rs. 5 lakhs, whichever is higher, they are now eligible for composition scheme.
It implies the person can supply services upto Rs.5.00 Lacs or 10% of turnover whichever is higher in a FY.
7
Eligibility & Conditions of taking ITC
16(2)
(2) Notwithstanding anything contained in this section, no registered person shall be entitled to the credit of any input tax in respect of any supply of goods or services or both to him unless,––
(a) he is in possession of a tax invoice or debit note issued by a supplier registered under this Act, or such other tax paying documents as may be prescribed;
(b) he has received the goods or services or both.
Explanation.-For the purposes of this clause, it shall be deemed that the registered person has received the goods where the goods are delivered by the supplier to a recipient or any other person on the direction of such registered person, whether acting as an agent or otherwise, before or during movement of goods, either by way of transfer of documents of title to goods or otherwise;
(c) subject to the provisions of section 41, the tax charged in respect of such supply has been actually paid to the Government, either in cash or through utilization of input tax credit admissible in respect of the said supply; and
(d) he has furnished the return under section 39
In section 16 of the principal Act, in sub-section (2),––
(a) in clause (b), for the Explanation, the following Explanation shall be substituted, namely:—
“Explanation.—For the purposes of this clause, it shall be deemed that the registered person has received the goods or, as the case may be, services––
(i) where the goods are delivered by the supplier to a recipient or any other person on the direction of such registered person, whether acting as an agent or otherwise, before or during movement of goods, either by way of transfer of documents of title to goods or otherwise;
(ii) where the services are provided by the supplier to any person on the direction of and on account of such registered person.”;
(b) in clause (c), for the word and figures “section 41”, the words, figures and letter “section 41 or section 43A” shall be substituted.
01.02.2019
Deemed receipt of Services for ITC – In case of services, the registered person shall be deemed to have received the services where the services are delivered by the supplier to recipient or any other person on the direction of the said registered person.
8
Blocked Credit
17(3)
The value of exempt supply under sub-section (2) shall be such as may be prescribed, and shall include supplies on which the recipient is liable to pay tax on reverse charge basis, transactions in securities, sale of land and, subject to clause (b) of paragraph 5 of Schedule II, sale of building.
In section 17 of the principal Act,––
In sub-section (3), the following Explanation shall be inserted, namely:–– ‘Explanation.—For the purposes of this sub-section, the expression “value of exempt supply” shall not include the value of activities or transactions specified in Schedule III, except those specified in paragraph 5 of the said Schedule.’;
8
Blocked Credit
17(3)
9
Blocked Credit
17(5)
Notwithstanding anything contained in sub-section (1) of section 16 and subsection (1) of section 18, input tax credit shall not be available in respect of the following, namely:-
(a) motor vehicles and other conveyances except when they are used––
(i) for making the following taxable supplies, namely:-
(A) further supply of such vehicles or conveyances ; or
(B) transportation of passengers; or
(C) imparting training on driving, flying, navigating such vehicles or conveyances;
(ii) for transportation of goods;
(iii) food and beverages, outdoor catering, beauty treatment, health services, cosmetic and plastic surgery except where an inward supply of goods or services or both of a particular category is used by a registered person for making an outward taxable supply of the same category of goods or services or both or as an element of a taxable composite or mixed supply;
(iv) membership of a club, health and fitness centre;
(v) rent-a-cab, life insurance and health insurance except where ––
(A) the Government notifies the services which are obligatory for an employer to provide to its employees under any law for the time being in force; or
(B) such inward supply of goods or services or both of a particular category is used by a registered person for making an outward taxable supply of the same category of goods or services or both or as part of
in sub-section (5), for clauses (a) and (b), the following clauses shall be substituted, namely:—
“(a) motor vehicles for transportation of persons having approved seating capacity of not more than thirteen persons (including the driver), except when they are used for making the following taxable supplies, namely:—
(A) further supply of such motor vehicles; or (B) transportation of passengers; or
(C) imparting training on driving such motor vehicles; (aa) vessels and aircraft except when they are used––
(i) for making the following taxable supplies, namely:—
(A) further supply of such vessels or aircraft; or (B) transportation of passengers; or (C) imparting training on navigating such vessels; or (D) imparting training on flying such aircraft; (ii) for transportation of goods; (ab) services of general insurance, servicing, repair and maintenance in so far as they relate to motor vehicles, vessels or aircraft referred to in clause (a) or clause (aa): Provided that the input tax credit in respect of such services shall be available— (i) where the motor vehicles, vessels or aircraft referred to in clause (a) or clause (aa) are used for the purposes specified therein; (ii) where received by a taxable person engaged— (I) in the manufacture of such motor vehicles, vessels or aircraft; or (II) in the supply of general insurance services in respect of such motor vehicles, vessels or aircraft insured by him;(b) the following supply of goods or services or both— (i) food and beverages, outdoor catering, beauty treatment, health services, cosmetic and plastic surgery, leasing, renting
9
Blocked Credit
17(5)
10
Input Service Distributor
20
Old Section- Explanation
(c) the term “turnover”, in relation to any registered person engaged in the supply of taxable goods as well as goods not taxable under this Act, means the value of turnover, reduced by the amount of any duty or tax levied under entry 84 of List I of the Seventh Schedule to the Constitution and entries 51 and 54 of List II of the said Schedule.
In section 20 of the principal Act, in the Explanation, in clause (c), for the words and figures “under entry 84,”, the words, figures and letter “under entries 84 and 92A” shall be substituted.
Consequential amendment is also made in explanation to Rule 42(1)(i) and Rule 43 (1)(g) to provide for the same
01.02.2019
This explanation has been amended to exclude the amount of tax levied under entry 92A of List 1 also i.e. CST leviable on the goods which are outside the scope of GST.The impact of this amendment would be that all type of taxes (central excise duty, VAT or CST) levied on the goods which are outside the scope of GST i.e. petrol, diesel, liquor etc. would not be included in the computation of turnover for the purpose of distribution of credit by ISD. This amendment is curative.
11
Compulsory Registration
24
Previously it was read as :
(x) every electronic commerce operator.
In section 24 of the principal Act, in clause (x), after the words “commerce operator”, the words and figures “who is required to collect tax at source under section 52” shall be inserted
01.02.2019
Small e-commerce operators who are not required to collect TCS u/s 52 would not be liable for registration
12
Procedure for Registration
25
(1) Every person who is liable to be registered under section 22 or section 24 shall apply for registration in every such State or Union territory in which he is so liable within thirty days from the date on which he becomes liable to registration, in such manner and subject to such conditions as may be prescribed
Provided that a casual taxable person or a non-resident taxable person shall apply for registration at least five days prior to the commencement of business.
(2) A person seeking registration under this Act shall be granted a single registration in a State or Union territory:
Provided that a person having multiple business verticals in a State or Union territory may be granted a separate registration for each business vertical, subject to such conditions as may be prescribed.
In section 25 of the principal Act,–
(b) in sub-section (2), for the proviso, the following proviso shall be substituted, namely:––
“Provided that a person having multiple places of business in a State or Union territory may be granted a separate registration for each such place of business, subject to such conditions as may be prescribed.”.
Vide notification 3/2019 – Central Tax, Rule 11 has been completely amended to operationalize the said provisions. Now, a taxpayer can take separate registration by fulfilling the following conditions –
-such person has more than one place of business as defined in clause
(85) of section 2;
-such person shall not pay tax under section 10 (composition scheme) for any of his places of business if he is paying tax under section 9 (regular) for any other place of business;
-all separately registered places of business of such person shall pay tax under the Act on supply of goods or services or both made to another registered place of business of such person and issue a tax invoice or a bill of supply, as the case may be, for such supply.
01.02.2019
Section 25(2) – Persons having multiple places of business in a State or Union territory may obtain separate registrations for each such place of business; Now the concept of vertical wise registration has been done away and the place of business wise registration may be taken. Further, Rule 41A has been inserted to provide that a registered person who has obtained separate registration for multiple places of business within the same state/ union territory and who intends to transfer, either wholly or partly, the unutilised input tax credit lying in his electronic credit ledger to any or all of the newly registered place of business, shall furnish, the details in FORM GST ITC- 02A within a period of thirty days from obtaining such separate registrations. The input tax credit shall be transferred to the newly registered entities in the ratio of the value of assets held by them at the time of registration. Note: ‘value of assets’ means the value of the entire assets of the business whether or not input tax credit has been availed thereon. The newly registered person (transferee) shall, on the common portal, accept the details so furnished by the registered person (transferor) and, upon such acceptance, the unutilised input tax credit specified in FORM GST ITC-02A shall be credited to his electronic credit ledger.
13
Cancellation & Suspension of Registration
29
(1) The proper officer may, either on his own motion or on an application filed by the registered person or by his legal heirs, in case of death of such person, cancel the registration, in such manner and within such period as may be prescribed, having regard to the circumstances where,––
(a) the business has been discontinued, transferred fully for any reason including death of the proprietor, amalgamated with other legal entity, demerged or otherwise disposed of; or (b) there is any change in the constitution of the business; or (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.
In section 29 of the principal Act,–
(a) in the marginal heading after the word “Cancellation”, the words “or suspension” shall be inserted;
(b) in sub-section (1), after clause (c), the following proviso shall be inserted, namely:—
“Provided that during pendency of the proceedings relating to cancellation of registration filed by the registered person, the registration may be suspended for such period and in such manner as may be prescribed.”;
(c) in sub-section (2), after the proviso, the following proviso shall be inserted, namely:—
“Provided further that during pendency of the proceedings relating to cancellation of registration, the proper officer may suspend the registration for such period and in such manner as may be prescribed
Following amendments have been made in the rules by inserting a new rule 21A:
-Sub-rule 1: Registration shall be deemed to have been suspended from the date of application under Rule 20 or the date from which cancellation is sought, whichever is later.
-Sub-rule 2: Where proper officer has reason to believe that the registration of a person is liable to be cancelled, he may suspend the registration of such person w.e.f. a date to be determined by him.
01.02.2019
The objective to amend Section 29 of the Act so as to insert a provision for temporary suspension of registration while cancellation of registration is under process.
The Govt. has issued new Circular No. 88/2019 dt. 01.02.2019 whereby corresponding changes have been carried out in Circular No. 69/43/2018 dated 26.10.2018 to bring in the time lines as specified under section 29
14
Credit/ Debit Notes
34
(1) Where a tax invoice has been issued for supply of any goods or services or both and the taxable value or tax charged in that tax invoice is found to exceed the taxable value or tax payable in respect of such supply, or where the goods supplied are returned by the recipient, or where goods or services or both supplied are found to be deficient, the registered person, who has supplied such goods or services or both, may issue to the
recipient a credit note containing such particulars as may be prescribed.
(2) Any registered person who issues a credit note in relation to a supply of goods or services or both shall declare the details of such credit note in the return for the month during which such credit note has been issued but not later than September following the end of the financial year in which such supply was made, or the date of furnishing of the relevant annual return, whichever is earlier, and the tax liability shall be adjusted in such manner as may be prescribed.
(3) Where a tax invoice has been issued for supply of any goods or services or both and the taxable value or tax charged in that tax invoice is found to be less than the taxable value or tax payable in respect of such supply, the registered person, who has supplied such goods or services or both, shall issue to the recipient a debit note containing such particulars as may be prescribed
In section 34 of the principal Act,–
(a) in sub-section (1),––
(i) for the words “Where a tax invoice has”, the words “Where one or more tax invoices have” shall be substituted;
(ii) for the words “a credit note”, the words “one or more credit notes for supplies made in a financial year” shall be substituted;
(b) in sub-section (3),––
(i) for the words “Where a tax invoice has”, the words “Where one or more tax invoices have” shall be substituted;
(ii) for the words “a debit note”, the words “one or more debit notes for supplies made in a financial year” shall be substituted.
Amendment has also been made in the rules by inserting a new rule 53(1A)
01.02.2019
A Dealer may Issue One Credit note for multiple Invoices. A change has to be made in the GST Portal also. It may be noted here that this is a procedural matter which was causing great hardship to dealers where specific Credit notes were required to be made for each invoice.
How portal would allow is to be seen ?
15
Audit & Accounts
35
(5) Every registered person whose turnover during a financial year exceeds the prescribed limit shall get his accounts audited by a chartered accountant or a cost accountant and shall submit a copy of the audited annual accounts, the reconciliation statement under sub- section (2) of section 44 and such other documents in such form and manner as may be prescribed.
In section 35 of the principal Act, in sub-section (5), the following proviso shall be inserted, namely:—
“Provided that nothing contained in this sub-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.”.
Amendments made in Rule 80 to exclude such Government Departments from the ambit of GST Audit
01.02.2019
Section 35 (5) – Any department of the Central or State Government which is subject to audit by CAG; & local authorities who are subject to audit, need not get their books of account audited. Conse-quential amendments made in Rule 80 to exclude such Government Departments from the ambit of Audit
16
Furnishing of Returns (including correction in returns and payment of tax before last date)
39 (1)
(1) Every registered person, other than an Input Service Distributor or a non-resident taxable person or a person paying tax under the provisions of section 10 or section 51 or section 52 shall, for every calendar month or part thereof, furnish, in such formand manner as may be prescribed, a return, electronically, of inward and outward supplies of goods or services or both, input tax credit availed, tax payable, tax paid and such other particulars as may be prescribed, on or before the twentieth day of the month succeeding such calendar month or part thereof.(7) Every registered person, who is required to furnish a return under sub-section (1) or sub-section (2) or sub-section
(3) or sub-section (5), shall pay to the Government the tax due as per such return not later than the last date on which he is required to furnish such return.
(9) Subject to the provisions of sections 37 and 38, if any registered person after furnishing a return under sub-section (1) or sub-section
(2) or sub-section (3) or sub-section (4) or sub-section (5) discovers any omission or incorrect particulars therein, other than as a result of scrutiny, audit, inspection or enforcement activity by the tax authorities, he shall rectify such omission or incorrect particulars in the return to be furnished for the month or quarter during which such omission or incorrect particulars are noticed, subject to payment of interest under this Act: Provided that no such rectification of any omission or incorrect particulars shall be allowed after the due date for furnishing of return for the month of September or second quarter following the end of the financial year, or the actual date of furnishing of relevant annual return, whichever is earlier.
In section 39 of the principal Act,––
(a) in sub-section (1),––
(i) for the words “in such form and manner as may be prescribed”, the words “in such form, manner and within such time as may be prescribed” shall be substituted;
(ii) the words “on or before the twentieth day of the month succeeding such calendar month or part thereof ” shall be omitted;
(iii) the following proviso shall be inserted, namely:—
“Provided that the Government may, on the recommen-dations of the Council, notify certain classes of registered persons who shall furnish return for every quarter or part thereof, subject to such conditions and safeguards as may be specified therein.”
yet to be notified
Section 39 relating to “Furnishing of Returns” has been amended so as to prescribe the procedure for quarterly filing of returns with monthly payment of taxes. Various other details in relation to filing of returns have been prescribed under this section. The new amendment provides for simplification of return filing procedures as proposed by the Returns Committee and approved by GST Council. The broad proposal of the new returns format has been placed earlier in the public domain, however the detailed new formats and the mechanism of its operation is not yet made available.
39 (7)
in sub-section (7), the following proviso shall be inserted, namely:–– “Provided that the Government may, on the recomme-ndations of the Council, notify certain classes of registered persons who shall pay to the Government the tax due or part thereof as per the return on or before the last date on which he is required to furnish such return, subject to such conditions and safeguards as may be specified therein.”
yet to be notified
39 (9)
in sub-section (9),––
(i) for the words “in the return to be furnished for the month or quarter during which such omission or incorrect particulars are noticed”, the words “in such form and manner as may be prescribed” shall be substituted;
(ii) in the proviso, for the words “the end of the financial year”, the words “the end of the financial year to which such details pertain” shall be substituted.
yet to be notified
17
Procedure for furnishing return and availing ITC
New 43A
After section 43 of the principal Act, the following section shall be inserted, namely:—
“43A. (1) Not with-standing anything contained in sub-section (2) of section 16, section 37 or section 38, every registered person shall in the returns furnished under sub-section (1) of section 39 verify, validate, modify or delete the details of supplies furnished by the suppliers.
(2) Notwith-standing anything contained in section 41, section 42 or section 43, the procedure for availing of input tax credit by the recipient and verification thereof shall be such as may be prescribed.
(3) The procedure for furnishing the details of outward supplies by the supplier on the common portal, for the purposes of availing input tax credit by the recipient shall be such as may be prescribed.
(4) The procedure for availing input tax credit in respect of outward supplies not furnished under sub-section (3) shall be such as may be prescribed and such procedure may include the maximum amount of the input tax credit which can be so availed, not exceeding twenty per cent. of the input tax credit available, on the basis of details furnished by the suppliers under the said sub-section.
(5) The amount of tax specified in the outward supplies for which the details have been furnished by the supplier under sub-section (3) shall be deemed to be the tax payable by him under the provisions of the Act.
(6) The supplier and the recipient of a supply shall be jointly and severally liable to pay tax or to pay the input tax credit availed, as the case may be, in relation to outward supplies for which the details have been furnished under sub-section (3) or sub-section (4) but return
yet to be notified
New Section 43A is being introduced in order to enable the new return filing procedure as proposed by the Returns Committee and approved by GST Council. The new action 43A has been inserted for prescribing the procedure for furnishing return and availing input tax credit. The recipient is required to verify, validate, modify or delete the details entered by the supplier.
18
Payment of Tax
49
(2) The input tax credit as self-assessed in the return of a registered person shall be credited to his electronic credit ledger, in accordance with section 41, to be maintained in such manner as may be prescribed.
(5) The amount of input tax credit available in the electronic credit ledger of the registered person on account of––
(a) integrated tax shall first be utilized towards payment of integrated tax and the amount remaining, if any, may be utilized towards the payment of central tax and State tax, or as the case may be, Union territory tax, in that order;
(b) the central tax shall first be utilized towards payment of central tax and the amount remaining, if any, may be utilized towards the payment of integrated tax;
(c) the State tax shall first be utilized towards payment of State tax and the amount remaining, if any, may be utilized towards payment of integrated tax;
(d) the Union territory tax shall first be utilized towards payment of Union territory tax and the amount remaining, if any, may be utilized towards payment of integrated tax;
(e) the central tax shall not be utilized towards payment of State tax or Union territory tax; and
(f) the State tax or Union territory tax shall not be utilized towards
In section 49 of the principal Act,––
(a) in sub-section (2), for the word and figures “section 41”, the words, figures and letter “section 41 or section 43A” shall be substituted;
(b) in sub-section (5),––
(i) in clause (c), the following proviso shall be inserted, namely:–– “Provided that the input tax credit on account of State tax shall be utilized towards payment of integrated tax only where the balance of the input tax credit on account of central tax is not available for payment of integrated tax;”;
(ii) in clause (d), the following proviso shall be inserted, namely:––
“Provided that the input tax credit on account of Union territory tax shall be utilized towards payment of integrated tax only where the balance of the input tax credit on account of central tax is not available for payment of integrated tax;”.
01.02.2019
Now the credit of State tax or Union territory tax can be utilized for payment of integrated tax only when the balance of ITC on account of central tax is not available for payment of integrated tax i.e. CGST balance needs to be fully exhausted for payment of IGST, only after that SGST balance can be utilized for payment of IGST. The matter of fact is common portal has been doing this only suo motu much right from the beginning.
19
Utilization of input tax credit subject to certain conditions
New 49A
After section 49 of the principal Act, the following sections shall be inserted, namely:––
“49A. Notwith-standing anything contained in section 49, the input tax credit on account of central tax, State tax or Union territory tax shall be utilized towards payment of integrated tax, central tax, State tax or Union territory tax, as the case may be, only after the input tax credit available on account of integrated tax has first been utilized fully towards such payment.
01.02.2019
Now the balance of IGST has to be first utilized against payment of IGST, CGST & SGST/ UTGST. Only when the balance in IGST is fully exhausted only then can the balance in CGST & SGST can be utilized.
Check Example at the end of this table*
20
Order of utilization of input tax credit.
New 43B
49B. Notwith-standing anything contained in this Chapter and subject to the provisions of clause (e) and clause (f) of sub-section (5) of section 49, the Government may, on the recomme-ndations of the Council, prescribe the order and manner of utilization of the input tax credit on account of integrated tax, central tax, State tax or Union territory tax, as the case may be, towards payment of any such tax.
01.02.2019
The Govt. can further provide for manner of inter utilization of credit.
21
Refund of tax
Expla-nation 2(e ) to section 54
(2) “relevant date” means—
(e) in the case of refund of unutilised input tax credit under sub- section (3), the end of the financial year in which such claim for refund arises
in the Explanation, in clause (2),––
(ii) for sub-clause (e), the following sub-clause shall be substituted, namely:––
“(e) in the case of refund of unutilised input tax credit under clause (ii) of the first proviso to sub-section (3), the due date for furnishing of return under section 39 for the period in which such claim for refund arises
01.02.2019
Explanation 2 (e) -The “relevant date” for calculation of time period for refund of unutilised ITC has been amended to be the due date for furnishing the return under sec 39 for the period in which claim arises, so as to bring it in line with sec 54(3).
22
Recovery of Tax
79
Recovery of Tax
In section 79 of the principal Act, after sub-section (4), the following Explanation shall be inserted, namely:—
‘Explanation.––For the purposes of this section, the word person shall include “distinct persons” as referred to in sub-section (4) or, as the case may be, sub-section (5) of section 25
01.02.2019
Recovery can be made from any branch of a registered person in any state.
23
Appeals to Appellate Authority
107
(6) No appeal shall be filed under sub-section (1), unless the appellant has paid—
(a) in full, such part of the amount of tax, interest, fine, fee and penalty arising from the impugned order, as is admitted by him; and
(b) a sum equal to ten per cent. of the remaining amount of tax in dispute arising from the said order, in relation to which the appeal has been filed
In section 107 of the principal Act, in sub-section (6), in clause (b), after the words “arising from the said order,”, the words “subject to a maximum of twenty- five crore rupees,” shall be inserted
01.02.2019
The objective to amend sub-section (6) of Section 107 of the Act relating to Appeals so as to provide that the amount of pre- deposit payable for filing of appeal shall be capped at twenty five crore rupee
24
Appeals to Appellate Tribunal
112
(8) No appeal shall be filed under sub-section (1), unless the appellant has paid––
(a) in full, such part of the amount of tax, interest, fine, fee and penalty arising from the impugned order, as is admitted by him, and
(b) a sum equal to twenty per cent. of the remaining amount of tax in dispute, in addition to the amount paid under sub-section (6) of section 107, arising from the said order, in relation to which the
In section 112 of the principal Act, in sub-section (8), in clause (b), after the words “arising from the said order,” the words “subject to a maximum of fifty crore rupees,” shall be inserted
01.02.2019
The objective to amend sub-section (6) of Section 107 of the Act relating to Appeals so as to provide that the amount of pre- deposit payable for filing of appeal shall be capped at fifty crore rupee
25
Detention, seizure and release of goods and conveyances in transit
129
(6) Where the person transporting any goods or the owner of the goods fails to pay the amount of tax and penalty as provided in sub- section (1) within seven days of such detention or seizure, further proceedings shall be initiated in accordance with the provisions of section 130
In section 129 of the principal Act, in sub-section (6), for the words “seven days”, the words “fourteen days” shall be substituted
01.02.2019
The objective to amend Section 129 of the Act so as to increase the period relating to detention or seizure of goods and conveyance in transit from seven days to fourteen days. The Govt. has issued new Circular No. 88/2019 dt. 01.02.2019 whereby corres-ponding changes have been carried out in Circular No. 41/15/2018 dated 13.04.2018 to bring in the time lines as specified under section 129
26
Transitional arrangements for input tax credit.
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.
Explanation 1.—For the purposes of sub-sections (3), (4) and (6), the expression
“eligible duties” means––
(i) the additional duty of excise leviable under section 3 of the Additional Duties of Excise (Goods of Special Importance) Act, 1957;
(ii) the additional duty leviable under sub-section (1) of section 3 of the Customs Tariff Act, 1975;
(iii) the additional duty leviable under sub-section (5) of section 3 of the Customs Tariff Act, 1975
(iv) the additional duty of excise leviable under section 3 of the Additional Duties of Excise (Textile and Textile Articles) Act, 1978………. in respect of inputs held in stock and inputs contained in
semi-finished or finished goods held in stock on the appointed day Explanation 2.—For the purposes of sub-section (5), the expression “eligible duties and taxes” means––
(i) the additional duty of excise leviable under section 3 of the Additional Duties of Excise (Goods of Special Importance) Act, 1957;
(ii) the additional duty leviable under sub-section (1) of section 3 of the Customs Tariff Act, 1975;
In section 140 of the principal Act, with effect from the 1st day of July, 2017,––
(a) in sub-section (1), after the letters and word “CENVAT credit”, the words “of eligible duties” shall be inserted and shall always be deemed to have been inserted;
(b) in the Explanation 1—
(i) for the word, brackets and figures “sub-sections (3), (4)”, the word, brackets and figures “sub-sections (1), (3), (4)” shall be substituted and shall always be deemed to have been substituted;
(ii) clause (iv) shall be omitted and shall always be deemed to have been omitted;
(c) in the Explanation 2—
(i) for the word, brackets and figure “sub-section (5)”, the words, brackets and figures “sub-sections (1) and (5)” shall be substituted and shall always be deemed to have been substituted;
(ii) clause (iv) shall be omitted and shall always be deemed to have been omitted;
(d) after Explanation 2 as so amended, the following Explanation shall be inserted and shall always be deemed to have been inserted, namely:— Explanation 3.—For removal of doubts, it is hereby clarified that the expression “eligible duties and taxes” excludes any cess which has not been specified in Explanation 1 or Explanation 2 and any cess which is collected as additional duty of customs under sub-section (1) of section 3 of the Customs Tariff Act, 1975.’.
yet to be notified in totality
Non- allowability of Transitional Credit of c/f balances of CESS (E Cess+ KKC + SHE Cess) through TRAN-1 w.e.f. 01.07.2017. The Govt has also issued circular No. 87/2019 dt.01.02.2019 in this regard. Further, the Govt. has also issued notices for recovery, which is required to be made through cash payment in DRC-03 instead of reversal through GSTR-3B.
27
Job Work Procedure
143
(1) A registered person (hereafter in this section referred to as the “principal”) may under intimation and subject to such conditions as may be prescribed, send any inputs or capital goods, without payment of tax, to a job worker for job work and from there subsequently send to another job worker and likewise, and shall,––
(a) bring back inputs, after completion of job work or otherwise, or capital goods, other than moulds and dies, jigs and fixtures, or tools, within one year and three years, respectively, of their being sent out, to any of his place of business, without payment of tax;
(b) supply such inputs, after completion of job work or otherwise, or capital goods, other than moulds and dies, jigs and fixtures, or tools, within one year and three years, respectively, of their being sent out from the place of business of a job worker on payment of tax within India, or with or without payment of tax for export, as the case may be:
Provided that the principal shall not supply the goods from the place of business of a job worker in accordance with the provisions of this clause unless the said principal declares the place of business of the job worker as his additional place of business except in a case—
In section 143 of the principal Act, in sub-section (1), in clause (b), after the proviso, the following proviso shall be inserted, namely:—
“Provided further that the period of one year and three years may, on sufficient cause being shown, be extended by the Commissioner for a further period not exceeding one year and two years respectively
01.02.2019
The same will be beneficial in cases where the activities undertaken by Job worker takes longer period of time so that there is no need of sending back the goods to principle and receiving back. The Govt. has issued new Circular No. 88/2019 dt. 01.02.2019 whereby corresponding changes have been carried out in Circular No. 38/12/2018 dated 26.03.2018 to bring in the time lines as specified under section 143
28
Supply without consideration
Sche-dule I
4. Import of services by a taxable person from a related person or from any of his other establishments outside India, in the course or furtherance of business
In Schedule I of the principal Act, in paragraph 4, for the words “taxable person”, the word “person” shall be substituted
01.02.2019
Schedule I, Item No 4- import of services by entities which are not registered under GST (say, they are only making exempted supplies) but are otherwise engaged in business activities is taxed when received from a related person or from any of their establishments outside India. This will effect the foreign Companies not registered in India.
29
Activities to be treated as supply of goods or supply of services
Sche-dule II
Activities to be treated as supply of goods or supply of services
In Schedule II of the principal Act, in the heading, after the word “Activities”, The Words “Or Transactions” shall be inserted and shall always be deemed to have been inserted with effect from the 1st day of July, 2017
01.07.2017
Change in name of Schedule II :
Activities Or Transactions To Be Treated As Supply Of Goods Or Supply Of Services
30
Activities or Transactions which shall neither be treated as a supply of goods nor a supply of services
Sche-dule III
1. Services by an employee to the employer in the course of or in relation to his employment.
2. Services by any court or Tribunal established under any law for the time being in force.
3. (a) the functions performed by the Members of Parliament, Members of State Legislature, Members of Panchayat, Members of Municipalities and Members of other local authorities;
(b) the duties performed by any person who holds any post in pursuance of the provisions of the Constitution in that capacity; or (c) the duties performed by any person as a Chairperson or a Member or a Director in a body established by the Central Government or a State Government or local authority and who is not deemed as an employee before the commen-cement of this clause.
4. Services of funeral, burial, crematorium or mortuary including transportation of the deceased.
5. Sale of land and, subject to clause (b) of paragraph 5 of Schedule II, sale of building.
6. Actionable claims, other than lottery, betting and gambling
In Schedule III of the principal Act, —
(i) after paragraph 6, the following paragraphs shall be inserted, namely:––
“7. Supply of goods from a place in the non-taxable territory to another place in the non-taxable territory without such goods entering into India.
8. (a) Supply of warehoused goods to any person before clearance for home consumption;
(b) Supply of goods by the consignee to any other person, by endorsement of documents of title to the goods, after the goods have been dispatched from the port of origin located outside India but before clearance for home consumption. ”;
(ii) the Explanation shall be numbered as Explanation 1 and after Explanation 1 as so numbered, the following Explanation shall be inserted, namely:—
‘Explanation 2.––For the purposes of paragraph 8, the expression “warehoused goods” shall have the same meaning as assigned to it in the Customs Act, 1962
01.02.2019
The amendment is done to ensure that there is no double taxation of transactions where supply of goods occurs in the course of high sea sales and sale of warehoused goods, before clearance for home consumption. It was observed that in case of supply of goods as high seas sales and sale of warehoused goods, before being cleared for home consumption, IGST was being levied twice, once under the Customs Tariff Act, 1975 (read with the IGST Act) and then for a second time, on clearance for home consumption under the IGST Act. Since double taxation needs to be avoided, Circulars were issued to state that IGST would be payable only once at the time of clearance of goods for home consumption. However, it is imperative that such situations are squarely mentioned as ‘no supply’ in Schedule III.

*Example of Point No. 19 –

Descr-iption Tax

payable

ITC

available

paid through ITC Cash Pay-ment
IGST CGST SGST
IGST 100 200 100
CGST 100 130 100 30
SGST 100 80 80 20

This may result in cash payment of SGST, with simultaneous accumulation of CGST credit.

IMPORTANT AMENDMENTS IN IGST ACT

S.

No.

What is amended? Amended Section Old Version Amendment Analysis
1 Definition of “Export of Services” 2 (6) “export of services” means the supply of any service when,––

(i) the supplier of service is located in India;

(ii) the recipient of service is located outside India;

(iii) the place of supply of service is outside India;

(iv) the payment for such service has been received by the supplier of service in convertible foreign exchange; and

(v) the supplier of service and the recipient of service are not merely establishments of a distinct person

(i) in clause (6), in sub-clause (iv), after the words “foreign exchange”, the words “or in Indian rupees wherever permitted by the Reserve Bank of India” shall be inserted Now, supply shall be treated as “export of services” even if payment is received in INR as permitted by RBI (Nepal/Bhutan)
2 Levy of Tax 5(4) (4) The central tax in respect of the supply of taxable goods or services or both by a supplier, who is not registered, to a registered person shall be paid by such person on reverse charge basis as the recipient and all the provisions of this Act shall apply to such recipient as if he is the person liable for paying the tax in relation to the supply of such goods or services or both. Amendment of section 5(4)-

In section 5 of the principal Act, for sub-section (4), the following sub- section shall be substituted, namely:–

“(4) The Government may, on the recommen-dations of the Council, by notification, specify a class of registered persons who shall, in respect of supply of specified categories of goods or services or both received from an unregistered supplier, pay the tax on reverse charge basis as the recipient of such supply of goods or services or both, and all the provisions of this Act shall apply to such recipient as if he is the person liable for paying the tax in relation to such supply of goods or services or both.”.

The objective to amend Section 5 of the Act empowering the Central Government is to notify classes of registered persons to pay the tax on reverse charge basis in respect of receipt of supplies of certain specified categories of goods or services or both from unregistered suppliers. This is in line with amendment made in CGST Act
3 Intra-State Supply 8 Explanation 1.––For the purposes of this Act, where a person has,––

(iii) an establishment in a State or Union territory and any other establishment being a business vertical registered within that State or Union territory

In section 8 of the principal Act, in sub-section (2), in Explanation 1, in clause (iii), the words, ‘‘being a business vertical’’ shall be omitted Now, concept of “business vertical” is no more there since multiple registration is allowed for respective place of business is allowed in the same State
4 Place of supply of

services where

location of supplier and recipient is in

India.

12 The place of supply of services by way of transportation of goods,

including by

mail or courier to,––

(a)a registered person, shall be the location of such person;

(b) a person other than a registered person, shall be the location at which such goods are handed over for their transportation.

In section 12 of the principal Act, in sub-section (8), the following proviso

shall be inserted, namely:––

“Provided that where the transportation of goods is to a place outside India, the place of supply shall be the place of destination of such goods

In case of export of goods, the place of supply of transportation

services shall be outside India.Since POS is outside India, the service is not chargeable to GST.

5 Place of supply of services where location of supplier or location of

recipient is outside India.

13 (3) The place of supply of the following services shall be the location where the services are actually performed, namely-

(a) services supplied in respect of goods which are required to be made physically available by the recipient of services to the supplier of services, or to a person acting on behalf of the supplier of services in order to provide the services:

Provided further that nothing contained in this clause shall apply in the case of services supplied in respect of goods which are temporarily imported into India for repairs and are exported after repairs without being put to any other use in India, than that which is required for such

In section 13 of the principal Act, in sub-section (3), in clause (a), for the second proviso, the following proviso shall be substituted, namely:–– “Provided further that nothing contained in this clause shall apply in the case of services supplied in respect of goods which are temporarily imported into India for repairs or for any other treatment or process and are exported after such repairs or

treatment or process without being put to any use in India, other than that which is required for such repairs or treatment or process.

In addition to “repairs”, “job work” is also included in exception.
6 Appeals

(provisions of CGST Act to applicable)

20 In section 20 of the principal Act, after the fourth proviso, the following proviso shall be inserted, namely:––

“Provided also that where the appeal is to be filed before the Appellate Authority or the Appellate Tribunal, the maximum amount payable shall be fifty crore rupees and one hundred crore rupees respectively

This is line with the amendment made in the CGST Act.

ILLUSTRATIVE SCENARIOS FOR EXPLAINING PROVISIONS OF AMENDED-17(5)(a)(b)

Nature of Goods/Services Nature of Supply Admissibility of ITC on inward supply
Before Amendment After Amendment
Passenger motor vehicle with approved seating capacity upto 13 persons (inc. driver) – Innova/Two-wheeler Given on rent/sale/lease (further outward supply) Yes Yes
for own use No No
for passenger transportation
– consideration is charged Yes Yes
– consideration is not charged No No
for transportation of employees
– consideration is charged Yes Yes
– consideration is not charged No No
used for imparting driving Yes Yes
repair/maintenance/insurance/service (inward supply) There was no absolute clarity

?

Yes, if ITC is available on such motor vehicle depending upon its use. So to say, if vehicle is used for purposes against which ITC is available,

then Yes.

taken on rent/hire (inward supply) No Yes, if used for further supply as specified
Passenger motor vehicle with approved seating capacity more than 13 persons (inc. driver) – Bus/Van Given on rent Yes Yes
for own use No Yes
for passenger transportation
– consideration is charged Yes Yes
– consideration is not charged No Yes
for transportation of employees
– consideration is charged Yes Yes
– consideration is not charged No Yes
used for imparting driving Yes Yes
repair/maintenance/service (inward supply) There was no absolute clarity

?

Yes
taken on rent/hire (inward supply) No Yes, irrespective of use
Any other Motor Vehicle Any purpose Only, when used for

transportation of goods

Yes
Foods & Beverages/Outdoor catering/beauty treatment/health services/life insurance/health insurance for own use Not available Not available
for providing outward supply Yes Yes
for employees as mandated under any law No Yes
membership of club, health & fitness centre for own use Not available Not available
provided to employees as mandated under any law No Yes
travel benefits to employees as mandated under any law No Yes

Disclaimer: This material and the information contained herein prepared by Keshav Maloo & Associates, Chartered Accountants intended for clients and other chartered accountants to provide updates under GST and is not an exhaustive treatment of such subject. We are not, by means of this material, rendering any professional advice or services. It should not be relied upon as the sole basis for any decision which may affect you or your business.

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