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Finance Bill, 2022 has proposed certain changes in Goods and Services Tax laws through proposals contained in its clauses 99 to 123. While these amendments shall come into force from a notified date after enactment of Finance Bill, 2022, there are specific proposals which upon enactment, shall come into force from retrospective effect or date as specified and shall be deemed as if such amended provisions or notifications were in force from such retrospective date.
Retrospective relief in interest liability on wrong ITC in GST: Finance Bill, 2022
- According to section 50(3) of CGST Act, 2017, a taxable person who makes an undue or excess claim of input tax credit under section 42(10) or undue or excess reduction in output tax liability under section 43(10), shall pay interest on such undue or excess claim or on such undue or excess reduction.
- Finance Bill, 2022 has proposed to substitute new sub-section 50(3) retrospectively, with effect from the 1st July, 2017, so as to provide for levy of interest on input tax credit wrongly availed and utilized, and to provide for prescribing manner of calculation of interest in such cases.
- This amendment would result in following :
- No interest leviable if wrong ITC availed but not utilized
- Interest to be levied only when ITC is both, availed and utilized
- No new litigation on this issue
- The rules will prescribe the manner of calculation of interest
- The amendment will have retrospective effect from 1.7.2017.
[Source: Clause 110 of Finance Bill, 2022]
Common GST Portal
- Clause 114 of Finance Bill, 2022 proposes to amend Notification No. 9/2018-CT dated 23.01.2018 issued under section 146 of CGST Act, 2017 / under section 20 of IGST Act, 2017.
- The said amendment implies that such notification will be deemed to have retrospective effect w.e.f. 22.06.2017.
- gst.gov.in was notified as common electronic portal vide Notification No. 4/2017-CT dated 19.06.2017 w.e.f. 22.06.2017.
- Thus, www.gst.gov.in will be the common goods and services tax electronic portal w.e.f. 22.06.2017 for all functions provided under CGST Rules, 2017 except those provided for e-way bills and generation of e-invoices (for these, there are separate portals)
- This amendment shall have retrospective application, i.e., w.r.e.f. 22.06.2017.
[Source: Clause 114 of Finance Bill, 2022]
Revised Rate of Interest with retrospective effect
- Clause 115 proposes to amend Notification No. 13/2017-CT dated 28.06.2017, Notification No. 6/2017-Integrated Tax dated 28.06.2017 and Notification No. 10/2017-UT dated 28.06.2017 with retrospective effect (i.e., from 1.7.2017). These Notifications was issued under section 50(1, 3), 54(12) and 56 of CGST Act, 2017.
- The amendment notifies the rate of interest to be 18% instead of 24% w.r.e.f. 1.7.2017 under section 50(3) of CGST Act, 2017.
- Also, clause 118 and 121 of Finance Bill it notifies the rate of interest to be 18% instead of 24% w.r.e.f. 1.7.2017 in relation to IGST and UTGST.
- This interest is levied for wrong availment and utilization of input tax credit.
- With retrospective amendment, the prevailing confusion and litigation shall get settled.
[Source: Clause 115 read with 118 and 121 of Finance Bill, 2022]
Retrospective exemption from GST on supply of fish meal related waste
- Clause 116 of Finance Bill, 2022 proposes a retrospective exemption to levy or collection of Central Tax (CGST) in respect of supply of unintended waste generated during the production of fish meal (except for fish oil).
- Clause 119 seeks to provide retrospective exemption from integrated tax (IGST) in respect of supply of unintended waste generated during the production of fish meal (falling under heading 2301), except for fish oil, during the period from the 1st day of July, 2017 upto the 30th day of September, 2019 (both days inclusive).
- Clause 122 seeks to provide retrospective exemption from Union territory tax (UTGST) in respect of supply of unintended waste generated during the production of fish meal (falling under heading 2301), except for fish oil, during the period from the 1st day of July, 2017 upto the 30th day of September, 2019 (both days inclusive).
- Clause 116 seeks to provide retrospective exemption from central tax in respect of supply of unintended waste generated during the production of fish meal (falling under heading 2301), except for fish oil, during the period from the 1st day of July, 2017 upto the 30th day of September, 2019 (both days inclusive).
- Thus, notwithstanding anything contained in Notification No. 01/2017-CT(Rate) dated 28.06.2017, no CGST should be levied or collected in respect of supply of unintended waste generated during the production of fish meal, for the period from 01.07.2017 to 30.09.2019.
- Similar retrospective amendment has been proposed in respect of Notification 1/2017-IT (Rate) dated 28.06.2017, vide clause 119 of the Finance Bill.
- Similar retrospective amendment has been proposed in respect of Notification 1/2017-UTT (Rate) dated 28.06.2017, vide clause 122 of the Finance Bill.
- However, no refunds shall made of such tax which has already been collected.
[Source: Clause 116, 119 and 122 of Finance Bill, 2022]
Retrospective exemption from GST on liquor license fee
- Clause 117 seeks to give retrospective effect to the notification of the Government of India in the Ministry of Finance (Department of Revenue) number G.S.R. 746(E), dated the 30th September, 2019 with effect from the 1st day of July, 2017.
- Clause 120 seeks to give retrospective effect to the notification of the Government of India in the Ministry of Finance (Department of Revenue) number G.S.R. 745(E), dated the 30th September,2019 with effect from the 1st day of July,2017.
- Clause 123 seeks to give retrospective effect to the notification of the Government of India in the Ministry of Finance (Department of Revenue) number G.S.R. 747(E), dated the 30th September, 2019 with effect from the 1st day of July, 2017.
- Thus, Notification No. 25/2019-CT (Rate) dated 30.09.2019 shall have retrospective effect from 01.07.2017. The said Notification No. 25/2019-CT (Rate) dated 30.09.2019 declares that “services by way of grant of alcoholic liquor license against consideration in the form of license fee or application fee or by whatever name it is called” shall neither be treated as supply of goods or supply of services.
- Similar retrospective amendment has been proposed in respect of Notification 24/2019-IT(Rate) dated 30.09.2019, vide clause 120 of the Finance Bill.
- Similar retrospective amendment has been proposed in respect of Notification 25/2019-UTT (Rate) dated 30.09.2019, vide clause 123 of the Finance Bill.
- However, no refund shall be made of all such taxes which have been collected but which would not have been so collected, had the notification been in force during relevant period.
- It implies that tax collected / paid between 01.07.2017 and 30.09.2019 will not be refunded now, i.e., those who have paid will not get refund but those who did not paid till now need not pay such tax.
[Source: Clause 117, 120 and 123 of Finance Bill, 2022]
The above proposals shall be effective from retrospective date as mentioned in the proposals after enactment of Finance Bill, 2022 and new Notifications issued.
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As stipulated in Article 279A amendments to the CGST Act and every SGST Act would have to be preceded by a recommendation of the GST Council. The Article does not refer to any recommendation of the GST Council and the serial number and date of such recommendation. Since the GST Council would have to comply with the norm of “harmony” stipulated in Article 279A (6), both the earlier recommendation and the retrospective recommendation for amendment would have to satisfy that norm.