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AMENDMENTS TO GST ACTS BY FINANCE BILL, 2021

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AMENDMENTS TO GST ACTS BY FINANCE BILL, 2021
By: Mr.áM. GOVINDARAJAN
February 2, 2021
All Articles by: Mr.áM. GOVINDARAJAN       View Profile
  • Contents

Finance Minister, in her budget presentation, did many a thing.  The GST Acts also met amendments through this Finance Bill.  Section 99 to section 113 of Finance Bill, 2021 (‘Bill’ for short) brought amendments to Central Goods and Services Tax Act, 2017 (‘Act’ for short) and section 114 brought amendment to section 16 of the Integrated Goods and Services Tax Act, 2017 (‘IGST Act’ for short).

Amendments to Act

Supply

Section 99 of the Bill enlarges the definition of the term ‘supply’.  The Bill inserted one sub clause, section 7(1)(aa).  The newly inserted clause provides that the term ‘supply’ includes the activities or transactions, by a person, other than an individual, to its members or constituents or vice versa, for cash, deferred payment or other valuable consideration.  An Explanation is also inserted by the Bill.  The explanation clarifies that notwithstanding anything contained in any other law for the time being in force or any judgment, decree or order of any Court, tribunal or authority, the person and its members or constituents shall be deemed to be two separate persons and the supply of activities or transactions inter se shall be deemed to take place from one such person to another.

Input tax credit

Section 16(2) of the Act put conditions for availing input tax credit.  Section 100 of the Bill introduces a clause 16(2)(aa).

Section 16(2) (a) provides that 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 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.

The newly inserted section 16(2)(aa) provides that the details of the invoice or debit note referred to in clause (a) 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 in the manner specified under section 37.

Dispensation with GST Audit

Section 35(5) of the Act provides that 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.    The proviso to the said section provides 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.

Section 101 of the Bill omitted section 35(5) by this the assessees are not required to get their accounts audited by the Chartered Accountants or Cost Accountants.

Annual return

Section 44 of the Act provides the procedure for filing annual return by the assessees.  Section 102 of the Bill substituted section 44

The newly substituted section 44 provide that every registered person, other than-

  • an Input Service Distributor;
  • a person paying tax under section 51 or section 52;
  • a casual taxable person; and
  •  a non-resident taxable person

shall furnish an annual return which may include a self certified reconciliation statement, reconciling the value of supplies declared in the return furnished for the financial year, with the audited annual financial statement for every  financial year electronically, within such time and in such form and in such manner as may be prescribed.

The Commissioner may, on the recommendations of the Council, by notification, exempt any class of registered persons from filing annual return under this section.

Nothing contained in this 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.

Interest on delayed payment of tax

Section 50 of the Act requires for the payment of interest on delayed payment of tax.  Section 103 of the bill substitutes a new proviso for the existing proviso to section 50(1).

The newly substituted proviso to section 50(1) of the Act provides that the interest on tax payable in respect of supplies made during a tax period and declared in the return for the said period furnished after the due date in accordance with the provisions of section 39, except where such return is furnished after commencement of any proceedings under section 73 or section 74 in respect of the said period, shall be payable on that portion of the tax which is paid by debiting the electronic cash ledger.

This amended section shall be deemed to have been substituted with effect from the 1st day of July, 2017.

Demand and recovery

Section 74 of the Act provides the procedure for determination of tax not paid or short paid or erroneously refunded or input tax credit wrongly availed or utilized by reason of fraud or any willful-misstatement or suppression of facts.  Explanation (ii) to this section provides that where the notice under the same proceedings is issued to the main person liable to pay tax and some other persons, and such proceedings against the main person have been concluded under section 73 or section 74, the proceedings against all the persons liable to pay penalty under sections 122, 125, 129 and 130 are deemed to be concluded.

Section 104 of the Bill substituted ‘sections 122 and 125’ for the words ‘sections 122, 125, 129 and 130’.

General provisions relating to determination of tax

Section 75 of the Act provides the general provisions relating to determination of tax.

Section 105 of the Bill inserts an explanation to this section defining the expression ‘self assessed tax’.  The expression ‘self assessed tax’ is defined as including the tax payable in respect of details of outward supplies furnished under section 37, but not included in the return furnished under section 39.

Provisional attachment

Section 83 gives powers to the Authorities for provisional attachment to protect revenue in certain cases.  Section 83(1) of the Act provides that where during the pendency of any proceedings under section 62 or section 63 or section 64 or section 67 or section 73 or section 74, the Commissioner is of the opinion that for the purpose of protecting the interest of the Government revenue, it is necessary so to do, he may, by order in writing attach provisionally any property, including bank account, belonging to the taxable person in such manner as may be prescribed.

Section 106 of the Bill substitutes a new section for the existing section 83(1).  The newly substituted section 83(1) provides that Where, after the initiation of any proceeding under-

 the Commissioner is of the opinion that for the purpose of protecting the interest of the Government revenue it is necessary so to do, he may, by order in writing, attach provisionally, any property, including bank account, belonging to the taxable person or any person specified in sub-section (1A) of section 122, in such manner as may be prescribed.

Appeals to Appellate Authority

Section 107 of the Act provides the procedure for filing appeal before the Appellate Authority.  Section 107(6) of the Act provides that no appeal shall be filed, unless the appellant has paid-

  1. 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
  2. a sum equal to ten per cent. of the remaining amount of tax in dispute arising from the said order subject to a maximum of twenty-five crore rupees, in relation to which the appeal has been filed.

Section 107 of the Bill inserts a proviso to section 107(6).  The newly inserted proviso provides that no appeal shall be filed against an order under sub-section (3) of section 129, unless a sum equal to 25% of the penalty has been paid by the appellant. 

Detention, seizure and release of goods and conveyances in transit

Section 129 of the Act provides the procedure of detention, seizure and release of goods and conveyances in transit by the proper officers.

Section 108 of the Bill brings the following amendments to section 129-

The newly substituted section 129(1)(a) provides that the goods and conveyances shall be released on payment of penalty equal to 200% (previously it was 100%) of the tax payable on such goods and, in case of exempted goods, on payment of an amount equal to 2% of the value of goods or ₹ 25000/-, whichever is less, where the owner of the goods comes forward for payment of such penalty.

The newly substituted section 129(1)(b) provides that the goods and conveyances shall be released on payment of penalty equal to 50% of  the value of the goods or 200%  (previously no such provision) of the tax payable on such goods, whichever is higher, and in case of exempted goods, on payment of an amount equal to 5% of the value of goods or ₹ 25000/-, whichever is less, where the owner of the goods does not come forward for payment of such penalty.

Section 129(2), which provides that the provisions of sub-section (6) of section 67 shall, mutatis mutandis, apply for detention and seizure of goods and conveyances, is omitted.

The newly substituted section 129(3) provides that the proper officer detaining or seizing goods or conveyance shall issue a notice within seven days of such detention or seizure, specifying the penalty payable, and thereafter, pass an order within a period of seven days from the date of service of such notice, for payment of penalty under clause (a) or clause (b) of sub-section (1).  Previously there is no such limitation for issuing notice and passing order.

Section 129(4) provides that no tax, interest or penalty shall be determined under sub-section (3) without giving the person concerned an opportunity of being heard.  The amendment substitutes the words ‘no penalty’ for ‘no tax, interest or penalty’.

The newly substituted section 129(6) provides that where the person transporting any goods or the owner of such goods fails to pay the amount of penalty under sub-section (1) within fifteen days from the date of receipt of the copy of the order passed under sub-section (3), the goods or conveyance so detained or seized shall be liable to be sold or disposed of otherwise, in such manner and within such time as may be prescribed, to recover the penalty payable under sub-section (3).

The conveyance shall be released on payment by the transporter of penalty under sub-section (3) or one lakh rupees, whichever is less.

Where the detained or seized goods are perishable or hazardous in nature or are likely to depreciate in value with passage of time, the said period of fifteen days may be reduced by the proper officer.

Amendment to section 130

Section 130 of the Act provides for confiscation of goods and conveyances and levy of penalty.  Section 109 of the Bill brings the following amendments in section 130-

Section 130(1) starts ‘notwithstanding anything contained in this Act, if’.  These phrases are substituted by the word ‘Where’.

The second proviso to section 130(2) provides that the aggregate of such fine and penalty leviable shall not be less than the amount of penalty leviable under sub-section (1) of section 129.  The amendment substituted the words ‘penalty equal to hundred per cent. of the tax payable on such goods’ for the words ‘amount of penalty leviable under sub-section (1) of section 129’.

Section 130(3) provides that where any fine in lieu of confiscation of goods or conveyance is imposed under sub-section (2), the owner of such goods or conveyance or the person referred to in sub-section (1), shall, in addition, be liable to any tax, penalty and charges payable in respect of such goods or conveyance.  This sub section has been omitted by the Bill.

Amendment to section 151

Section 151 of the Act has given power to the Commissioner to collect data for statistical purposes.  This section has been substituted for a new section by section 110 of the Bill.  The newly substituted section gives powers to the Commissioner to call for information.  The newly substituted section 151 provides that the Commissioner or an officer authorized by him may, by an order, direct any person to furnish information relating to any matter dealt with in connection with this Act, within such time, in such form, and in such manner, as may be specified therein.

Amendment to section 152

Section 152 of the Act provides bar on disclosure of information.  Section 152(1) provides that no information of any individual return or part thereof with respect to any matter given for the purposes of section 150 or section 151 shall, without the previous consent in writing of the concerned person or his authorized representative, be published in such manner so as to enable such particulars to be identified as referring to a particular person and no such information shall be used for the purpose of any proceedings under this Act.

Section 111 of the bill omits the words ‘of any individual return or part thereof’.  The Bill substitutes the words ‘without giving an opportunity of being heard to the person concerned’ for the worlds ‘any proceedings under this Act’.

Section 152(2) of the Act provides that except for the purposes of prosecution under this Act or any other Act for the time being in force, no person who is not engaged in the collection of statistics under this Act or compilation or computerization thereof for the purposes of this Act, shall be permitted to see or have access to any information or any individual return referred to in section 151.  The bill omits this section 152(2).

Schedule II

Schedule II of the Act provides the list of activities or transactions to be treated as supply of goods or supply of services.

Para 7 of the Schedule II provides that the following shall be treated as supply of goods, namely-

  • Supply of goods by any unincorporated association or body of persons to a member thereof for cash, deferred payment or other valuable consideration.

Section 113 of the Bill omits the above said para 7.  This omission shall be deemed to have been omitted with effect from the 1st day of July, 2017.

IGST Act

Section 16 of the IGST Act deals with zero rated supplies.  Section 114 of the bill brings amendment to this section.  Section 16(1) defines the expression ‘zero rated supply’ as any of the following supplies of goods or services or both, namely-

  1. export of goods or services or both; or
  2. supply of goods or services or both to a Special Economic Zone developer or a Special Economic Zone unit.

Section 114 of the Bill inserts the words ‘for authorized operations’ after the words ‘supply of goods or services or both’.

The Bill substituted a new section 16(3) for the existing one.  The newly substituted section 16(3) provides that a registered person making zero rated supply shall be eligible to claim refund of unutilized input tax credit on supply of goods or services or both, without payment of integrated tax, under bond or Letter of Undertaking, in accordance with the provisions of section 54 of the Central Goods and Services Tax Act or the rules made there under, subject to such conditions, safeguards and procedure as may be prescribed.  The registered person making zero rated supply of goods shall, in case of non-realization of sale proceeds, be liable to deposit the refund so received under this sub-section along with the applicable interest under section 50 of the Central Goods and Services Tax Act within thirty days after the expiry of the time limit prescribed under the Foreign Exchange Management Act, 1999 for receipt of foreign exchange remittances, in such manner as may be prescribed.

Section 16 (4) provides that the Government may, on the recommendation of the Council, and subject to such conditions, safeguards and procedures, by notification, specify––

  1.  a class of persons who may make zero rated supply on payment of integrated tax and claim refund of the tax so paid;
  2. a class of goods or services which may be exported on payment of integrated tax and the supplier of such goods or services may claim the refund of tax so paid.

 

By: Mr.áM. GOVINDARAJAN - February 2, 2021

 

 

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