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Unfortunate retrospective amendment in GST laws when there was no scope of doubt or ambiguity in provisions. More so when it is to nullify law as interpreted and finally declared by honorable Supreme Court - whether amendment to substitute word "or" with "and" in between word 'plant' and, 'machinery' will serve purpose of such amendment? |
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Unfortunate retrospective amendment in GST laws when there was no scope of doubt or ambiguity in provisions. More so when it is to nullify law as interpreted and finally declared by honorable Supreme Court - whether amendment to substitute word "or" with "and" in between word 'plant' and, 'machinery' will serve purpose of such amendment? |
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Unfortunate retrospective amendment in GST laws when there was no scope of doubt or ambiguity in provisions. More so when it is to nullify law as interpreted and finally declared by honorable Supreme Court – whether amendment to substitute word “or” with “and” in between word ‘plant’ and,machinery’ will serve purpose of such amendment? Judgment which will be impacted / be ineffective is To the extent and if proposed amendment takes place. Reason to call it an unfortunate amendment: We know that the Central Goods and Services Tax Act, 2017 (in short CGST) was passed when BJP Led Central Government was in charge. Similarly THE INTEGRATED GOODS AND SERVICES TAX ACT, 2017 (IGST in short) was passed. Preambles reads as follows: Central Goods and Services Tax Act, 2017 Dated: 12th April 2017 An Act to make a provision for levy and collection of tax on intra-State supply of goods or services or both by the Central Government and the matters connected therewith or incidental thereto. BE it enacted by Parliament in the Sixty-eighth Year of the Republic of India as follows:– In section 2 (111) of CGST Act it is stated as follows: 2. In this Act, unless the context otherwise requires,–– (111) “the State Goods and Services Tax Act” means the respective State Goods and Services Tax Act, 2017; THE INTEGRATED GOODS AND SERVICES TAX ACT, 2017 No. 13 of 2017 Dated: 12th April 2017 An Act to make a provision for levy and collection of tax on inter-State supply of goods or services or both by the Central Government and for matters connected therewith or incidental thereto. BE it enacted by Parliament in the Sixty-eighth year of the Republic of India as follows:- Preamble of State GST for example from Andhra Pradesh Goods and Services Tax Act, 2017 The following Act of the Andhra Pradesh Legislature received the assent of the Governor on the 5th June, 2017 and the said assent is hereby first published on the 7th June, 2017 in the Andhra Pradesh Gazette for general information :- ACT No. 16 of 2017 AN ACT TO MAKE A PROVISION FOR LEVY AND COLLECTION OF TAX ON INTRA-STATE SUPPLY OF GOODS OR SERVICES OR BOTH BY THE STATE OF ANDHRA PRADESH AND FOR MATTERS CONNECTED THEREWITH AND INCIDENTAL THERETO. Be it enacted by Legislature of the State of Andhra Pradesh in the Sixty-eighth Year of the Republic of India as follows:- Various states and Union Territories also passed corresponding enactments namely: Therefore, it is clear that all related enactments for GST were initially passed in the year 2017 by the Central Government in Parliament and by States in Legislative Assemblies. All enactment are on the same lines, with some necessary modifications. Therefore, it can be said that the GST laws are very well discussed before their enactment at levels of all concerned. Furthermore, GST is a matter of regular celebration by way of meetings of GST councils, various amendment, various rulings and circulars and discussions on rulings. It is subject matter of ONE NATION ONE TAX and one nation, one tax and one market. Therefore, it is not good to say or give an impression that the enactment is not clear and contains ambiguity. We recall the process of introduction of GST laws took long time and after lengthy and time-consuming process GST came into force in 2017 and the BJP led government consider it as one of major achievements in initial years and first eight years as per publication entitled Major Achievements of the Ministry During Last Eight Years . The publication inter alia states as follows: “The Ministry of Parliamentary Affairs wrote the history while hosting the event relating to the Goods and Services a Tax (GST) Roll Out in the Central Hall of Parliament House at midnight on 30th June 2017. It was jointly inaugurated by the Hon‘ble President and Prime Minister and attended by Members of Parliament, Business leaders, and other VIPs from various walks of life. “ Besides various incidental enactments were also passed like The Goods and Services Tax (Compensation to States) Act, 2017 The Central Goods and Services Tax (Extension to Jammu and Kashmir) The Integrated Goods and Services Tax (Extension to Jammu and Kashmir) And there have been several amendment enactments. The Expression “plant or machinery” finds place once only in the Entire CGST Act. In Section 17(5)(d) in the following manner: d) goods or services or both received by a taxable person for construction of an immovable property (other than plant or machinery) on his own account including when such goods or services or both are used in the course or furtherance of business. (from CGST Act, 2017 as on 30.09.2020 found at https://cbic-gst.gov.in/pdf/CGST-Act-Updated-30092020.pdf autor found that the expression ”plant or machinery” find place only once in the enactment. Whereas the expression “plant and machinery” find mention at 10 places in different contexts. The word “plant” is not found and word “machinery” is found once only in S.17 (6) vide explanation thereto which reads as follows: Explanation.––For the purposes of this Chapter and Chapter VI, the expression ―plant and machinery‖ means apparatus, equipment, and machinery fixed to earth by foundation or structural support that are used for making outward supply of goods or services or both and includes such foundation and structural supports but excludes— (i) land, building or any other civil structures; (ii) telecommunication towers; and (iii) pipelines laid outside the factory premises. Similar are provisions found in respective state GST enactment. For example, in Section 17 (5) (d) of the Andhra Pradesh Goods and Services Tax Act, 2017 Apportionment of credit and blocked credits. xxx (d) goods or services or both received by a taxable person for construction of an immovable property (other than plant or machinery) on his own account including when such goods or services or both are used in the course or furtherance of business; Absence of definition or meaning: It is found that there is no definition or meaning provided for expressions like ‘plant’, machinery’, ‘tool’, ‘equipment’, and even for ‘building’, ‘structure’ etc. Therefore, meaning as understood of people conversant with subject matter and generally understood meaning is to be applied. Expression ‘used in the course or furtherance of business’ is much wider; The above expression is much wider than for the purpose of business. Budget proposal vide – the Finance Bill, 2025 Amendment of section 17. Amendment of section 17. 119. In section 17 of the Central Goods and Services Tax Act, in sub-section (5), in clause (d),–– (i) for the words “plant or machinery”, the words “plant and machinery” shall be substituted and shall be deemed to have been substituted with effect from the 1st day of July, 2017; (ii) the Explanation shall be numbered as Explanation 1 thereof, and after Explanation 1 as so numbered, the following Explanation shall be inserted, namely:–– ‘Explanation 2.––For the purposes of clause (d), it is hereby clarified that notwithstanding anything to the contrary contained in any judgment, decree or order of any court, tribunal, or other authority, any reference to “plant or machinery” shall be construed and shall always be deemed to have been construed as a reference to “plant and machinery”.’. Notes on clause: Clause 119 of the Bill seeks to amend clause (d) of sub-section (5) of section 17 of the Central Goods and Services Tax Act so as to substitute the expression “plant or machinery” with the expression “plant and machinery” to remove any ambiguity in interpretation for the purpose of availment of input tax credit in such cases. It further seeks to insert an Explanation to clarify that the said amendment is made notwithstanding anything to the contrary contained in any judgment, decree or order of any court or any other authority. This amendment shall take effect retrospectively from 1st day of July, 2017. The amendment is not within scope of its purpose: The amendment is said to be explanatory and to remove any ambiguity. Whereas we do not find any ambiguity for the reason that: Expression “plant or machinery” is used only once whereas expression “plant or machinery” is used ten times. There is no definition or meaning of any of related terms in CGST Act. And any of related state GST enactment. Therefore, it cannot be called an explanation and to remove ambiguity. Dispute started long ago: On search on this website we find results as follows: Search Results: Search Text: "plant or machinery" law GST any court Showing 138 Records Latest seems GOISU REALTY PVT. LTD. VERSUS STATE OF MAHARASHTRA & ORS. - 2025 (2) TMI 134 - BOMBAY HIGH COURT The earliest seems M/S KANJ PRODUCTS PRIVATE LIMITED - 2018 (6) TMI 429 - AUTHORITY FOR ADVANCE RULINGS, UTTARAKHAND Search Text: plant or machinery Include Text: input tax credit Showing 341 Records Latest seems GOISU REALTY PVT. LTD. VERSUS STATE OF MAHARASHTRA & ORS. - 2025 (2) TMI 134 - BOMBAY HIGH COURT The earliest seems IN RE: M/S. JSW ENERGY LTD. - 2018 (5) TMI 763 - AUTHORITY FOR ADVANCE RULINGS MAHARASHTRA Therefore, it is clear that subject claims for ITC were preferred even during initial years of GST. Many tax payers must have availed ITC which can now be denied if retrospective amendment takes place and authorities find scope to withdraw it, in spite of legal, administrative, physical and other limitations. Therefore, the proposed amendment should be dropped at all to keep faith in government, BJP party and our honorable Supreme Court. If this amendment takes place and effect is given, it will impair goodwill of our country by creating impression that law can be changed at any time. The judgment of honorable Supreme Court must continue to have effect to avoid tarnishing images of all concerned. Earlier articles about retrospective amendments by the author: Retrospective Amendments – High-time for Introspection by India
By: DEVKUMAR KOTHARI - February 7, 2025
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