Analysis of proposed amendments vide the Finance Bill, 2020 under Goods and Services Tax
1. Section 2(114) of the Central Goods and Services Act, 2017 (“the CGST Act”) will be amended to align the definition of ‘Union Territory’ in line with the Jammu and Kashmir Reorganisation Act, 2019 and the Dadra and Nagar Haveli and Daman and Diu (Merger of Union Territories) Act, 2019 [ Definition of Union Territory under CGST Act will be amended to make ‘Dadra and Nagar Haveli and Daman and diu’ as one Union Territory and Ladakh as Union Territory]
2. Section 10 of the CGST Act will be amended to restrict specified categories of supplier of services (i.e. supply of services not leviable to GST, inter-state outward supplies of services or supply of services through an electronic commerce operator where TCS is deductible) from opting composition scheme.
3. Time limit for availment of Input Tax Credit (“ITC”) on the basis of debit note under Section 16 of the CGST Act was considered from the date of original invoice whereas now it will be considered from the date of issuance of such debit note. [Beneficial for businesses where duration of issuance of debit notes were long]
4. Section 29 of the CGST Act will be amended to provide that the proper officer can cancel voluntary registration made under Section 25(3) of the CGST Act either on his own motion or an application filed by such person. [ Earlier there were no such provisions in law]
5. Section 30(1) of the CGST Act will be amended for providing powers for condoning the delay in applying for revocation of cancellation of registration wherein delay would be condoned upto 30 days by Additional Commissioner or Joint Commissioner and upto 60 days by Commissioner. [Delay in applying for revocation of cancellation of registration can be condoned for further 60 days on sufficient cause being shown and for reasons to be recording in writing, earlier there were no provisions for condoning such delay]
6. Section 31(2) of the CGST Act will be amended to empower to notify time and manner of issue of invoices for specific category of persons.
7. Section 51 of the CGST Act will be amended to provide prescribed form and manner of issuance of TDS Certificate and to dispense with late fees applicable in case of delay in issuance of TDS certificates. [ There will be no late fees for delay in issuance of TDS Certificates]
8. Section 109 of the CGST Act will be amended to provide that state bench of appellate tribunal can now be set up in Jammu & Kashmir also.
9. Section 122 of the CGST Act will be amended for imposition of penalty equal to 100% of tax evaded or ITC availed or passed on by any person who retains benefit of transaction or at whose instance such transactions are conducted, transactions are mentioned below:
• Supplies made without issuance of invoice or issuance of false invoice
• Issuance of invoice without actual supply in violation of provisions of GST Law
• Avails or utilizes ITC without actual receipt of goods or services either fully or part in contravention of provisions of GST Law
• Takes or distributes ITC in contravention of provisions of input service distributor (“ISD”)
10. Punishment for offences was earlier extended to only the person who commits the offences specified under Section 132 of the CGST Act whereas punishment would now be extended to a person who causes to commit and retain benefits arising out of such offence.
11. Further, Section 132 of the CGST Act will be amended to make the offence of fraudulent availment of ITC without invoice or bill cognizable and non-bailable under Section 69(1) of the CGST Act.
Impact of S No. 9, 10 & 11: Amendments will empower for impositions of penalties and punishments for persons indulged in tax evasion by way of fake invoicing or availment of ITC.
12. Section 140 of the CGST Act will be amended retrospectively to provide powers to prescribe time limit and the manner for transitional provisions.
13. Section 168 of the CGST Act will be amended for enabling the jurisdictional Commissioners to exercise powers relating to expense in case of special audit under Section 66(5) and extension of time limit in case of inputs and capital goods sent for job work under second proviso to Section 143(1) of the CGST Act, without requiring the Board Approval. [ Powers has been delegated to jurisdictional Commissioners i.e. Board Approval is not required]
14. Time limit for issuance of removal of difficulties order under Section 172 of the CGST Act has been extended to 5 years from the commencement of the CGST Act (i.e. July 1, 2017) as compared to the existing 3 years. [Beneficial in effective implementation of GST law, as GST law is still not stabilized]
15. Retrospective amendment has been made in Para 4 to Schedule II of the CGST Act to remove the defect in law whereby transfer of business asset was to be treated as supply of goods or service irrespective of consideration, now the same has been restricted only for consideration [ Ambiguity in law has been taken care]
16. Retrospective change in rates
• Retrospective exemption has been provided for levy of GST in respect of supply of fishmeal classified under heading 2301 from July 1, 2017 to September 30, 2019.
• GST is leviable @ 12% in respect of supply of pulley, wheels or other parts (classified under heading 8483) and used as parts of agricultural machinery (classified under headings 8432, 8433 and 8436) for the period July 1, 2017 to September 30, 2019.Provided, no refund in case where tax has been collected.
Impact: Beneficial for those who have not collected and not paid the tax on afore-said supplies
17. Notification issued under clause (ii) of proviso to Section 54 (3) of the CGST Act will be amended for retrospective restriction on refund of tobacco products under inverted duty structure, effective from July 1, 2017 [There will be accumulation of ITC which would lead to increase in cost of manufacture of tobacco products]