1. Section 10 - Removal of restriction on Composite Dealers for supply goods through e-commerce operator. |
Background : Section 10 deals with composition dealers and provides restriction on composite dealers to not to supply any goods or services through e-commerce operator.
Changes: Section 10 of CGST Act has now been amended to remove such restriction on composite dealers for supply of goods through e-commerce operator. However restriction for supply of services shall continue as earlier.
To give effect the above change, the words "goods or" have been omitted from clause (d) of sub-section (2) and clause (c) of sub-section (2A).
Another important aspect is whether composite dealers will be allowed to sell goods outside state through e-commerce operator or not? The answer is negative. There is no change in these provisions and composite dealers will not be allowed to sell their goods outside state as earlier. So this is going to be a challenging task before e-commerce operators.
Penalty on e-commerce operators if they allow composite dealers selling their goods outside state?
A new penalty clause has been inserted in Budget 2023 vide sub-section (1B) in section 122 of CGST Act to penalize the e-commerce operators, if they allow composite dealers selling their goods outside state. These penalty provisions have been discussed in detail in the later part of this article. Kindly scroll down for more details on it.
for more details visit: http://www.cachandru.in
2. Section 16(2) - Language correction to align it with the existing return filing system as per Act. |
Background : Second Proviso of section 16(2) of CGST Act deals with the reversal of ITC by taxpayer upon failure to pay the amount to the supplier within 180 days of date of invoice.
And Third Proviso deals with the re-availment of ITC reversed on subsequent payment by taxpayer to the supplier.
Changes : A slight correction has been made in the legal language of these two provisos to align it with the existing return filing system as per Act.
In Second Proviso, it was earlier mentioned that on failure to pay the amount within 180 days by taxpayer, previous ITC claimed shall be added to the output tax liability of taxpayer, however there was no automatic mechanism in place to add the same in output tax liability of taxpayer by GSTN. Taxpayers were paying this liability at their own only. So now it has been corrected and the words "shall be added to the output tax liability" have been replaced replaced with the words "shall be paid by taxpayer". As a effect, taxpayers will need to continue paying this liability at their own. There is no practical effect of this amendment. This is just a language correction in the law to align this section with the existing return filing system.
Third Proviso has been amended to include the words "to the supplier", to ensure that payment has been made by the taxpayer to the supplier only and not any third person. Previously there was a lacuna in the law, which has now been removed. There were instances and possibility, where payment was done by taxpayer to third person, but supplier did not actually receive the same. The said amendment aims to target that lacuna.
for more details visit: http://www.cachandru.in
3. Section 17 - Inclusion of High Sea Sales under value of exempt supplies to restrict availment of proportionate ITC on the same. |
Background : Section 17(2) & 17(3) provides restriction on availment of proportionate ITC on exempt supplies when taxpayer is engaged in supplying taxable and exempt supplies both.
Changes : Changes have been made in Explanation of Section 17(3) to restrict the availment of Proportionate ITC on transaction covered in para 8(a) of Schedule III (i.e. High Sea Sales) by including it in the value of exempt supplies. So as a result taxpayer will need to reverse more ITC.
ITC on CSR Activities:
Further, sub-section (5) of said section is also being amended so as to provide that ITC shall not be available in respect of goods or services or both received by a taxable person, which are used or intended to be used for activities relating to his obligations under corporate social responsibility (CSR) referred to in section 135 of the Companies Act, 2013. This was quite a debatable issue and the government now aims to settle it with this amendment.
for more details visit: http://www.cachandru.inR
4. Section 23 substituted to uphold its enforceability over section 22 & 24 in case of any contradiction. |
Background : Section 23 of the CGST Act deals with the provision, where a person is not liable to obtain GST Registration. Whereas section 22 and section 24 deals with the compulsory registration under GST.
Changes : Section 23 has been replaced w.e.f. 01.07.2017. The substituted section starts with a non obstante clause to override the provisions of compulsory registration as required under section 22 & section 24.
A non-obstante clause is added to a provision in order to uphold its enforceability over another provision that is contradictory to it.
The same been done to provide that persons for compulsory registration in terms of section 22 & section 24 need not register if exempt under sub section (1) of section 23.
for more details visit: http://www.cachandru.in
5. Section 37, 39, 44 & 52 - Introduces the maximum time limit of 3 years for filing GSTR-1, GSTR-3B, GSTR-9 / 9A / 9C & GSTR-8 from the due date of filing. |
Background : As of now, there is no maximum time limit for filing GSTR-1, GSTR-3B, GSTR-9 / 9A / 9C & GSTR-8 etc. Taxpayers are allowed to file it anytime with interest & penalty subject to suspension / cancellation of Registration.
Changes : Section 37, 39, 44, & 52 have been amended to provide the maximum time limit of 3 years for filing such forms from its corresponding due date.
Further, it also seeks to provide an enabling provision for extension of the said time limit, subject to certain conditions and restrictions, for a registered person or a class of registered persons.
for more details visit: http://www.cachandru.in
6. Section 54 amended to remove the reference to the provisionally accepted ITC to align the same with the existing scheme of availment of self assessed ITC. |
Background : Section 54 of the CGST Act deals with refund of GST and sub-section (6) includes reference to the provisionally accepted ITC. Which eventually never got implemented and also not in line with the existing system of self assessed ITC scheme.
Changes : Section 54(6) has been amended so as to remove the reference to the provisionally accepted ITC to align the same with the existing scheme of availment of self assessed ITC as per section 41(1) of CGST Act.
for more details visit: http://www.cachandru.in
7. Section 56 - Provides an enabling provision to prescribe manner of computation of period of delay for calculation of interest on delayed refunds. |
Background : Section 56 deals with interest on delayed refunds. There is currently a lot of litigation and ambiguity on such calculation.
Changes : Section 56 has been amended so as to provide for an enabling provision to prescribe manner of computation of period of delay for calculation of interest on delayed refunds.
The new rules would aim to address all such concerns.
for more details visit: http://www.cachandru.in
8. Section 122 - Prescribing penal provisions for e-commerce operators in certain cases. |
Background : Section 122 deals with penalty for certain offences in GST.
Changes : A new sub-section (1B) in section 122 is being inserted so as to provide for penal provisions applicable to e-commerce operators in case of contravention of provisions such as
a) allowing supply of goods through it by Unregistered Persons other than exempted persons;
b) allowing supply of goods outside state by Composite Dealers;
c) fails to supply correct details in return of any supply through it by exempted persons.
for more details visit: http://www.cachandru.in
9. Section 132 amended to decriminalize certain offences & increase monetary threshold limit from 1 Crore to 2 Crore for launching prosecution except in case of fake invoices. |
Background : Section 132 deals with punishment and criminalization of offences in GST.
Changes : Sub-section (1) of section 132 is being amended so as to decriminalize offences specified in clause (g), (j) and (k) of the said sub-section, which is as follows.
(g) obstructs or prevents any officer in the discharge of his duties under this Act;
(j) tampers with or destroys any material evidence or documents;
(k) fails to supply any information which he is required to supply under this Act or the rules made thereunder or (unless with a reasonable belief, the burden of proving which shall be upon him, that the information supplied by him is true) supplies false information; or
Clause (iii) has also been amended to increase the monetary threshold for launching prosecution for the offences under the said Act from one crore rupees to two crore rupees, except for the offences related to issuance of invoices without supply of goods or services or both.
for more details visit: http://www.cachandru.in
10. Section 138 - Rationalization of the amount for compounding of various offences by reducing the minimum and maximum amount. |
Background : Section 138 deals with compounding of offences in GST.
Changes : First proviso to sub-section (1) of section 138 is being amended so as to simplify the language of clause (a), to omit clause (b) and to substitute the clause (c) of said proviso so as to exclude the persons involved in offences relating to issuance of invoices without supply of goods or services or both from the option of compounding of the offences under the said Act.
It further seeks to amend sub-section (2) so as to rationalize the amount for compounding of various offences by reducing the minimum as well as maximum amount for compounding.
for more details visit: http://www.cachandru.in
11. Section 158A - Sharing of taxpayers' information for better governance with other departments. |
Changes : A new section 158A is being inserted so as to provide for prescribing manner and conditions for sharing of the information furnished by the registered person in his return or in his application of registration or in his statement of outward supplies, or the details uploaded by him for generation of electronic invoice or Eway bill or any other details, as may be prescribed, on the common portal with such other systems, as may be notified.
for more details visit: http://www.cachandru.in
12. Schedule III of CGST Act - Retrospective exemption to certain activities and transactions in Schedule III of CGST Act. |
Changes : Schedule III of the CGST Act is being amended to give retrospective applicability to Para 7, 8 (a) and 8 (b) of the said Schedule, with effect from 01st July, 2017, so as to treat the activities/ transactions mentioned in the said paragraphs as neither supply of goods nor supply of services.
However, it is also clarified that where the tax has already been paid in respect of such transactions/ activities during the period from 01st July, 2017 to 31st January, 2019, no refund of such tax paid shall be available. So if any person has paid tax on such activities in past then no refund shall be granted for the same.
for more details visit: http://www.cachandru.in
13. Section 2 of IGST Act - Revision of the definition of Non-Taxable Online Recipient and OIDAR. |
Changes : Clause (16) of section 2 of the IGST Act is being amended so as to revise the definition of “non-taxable online recipient” by removing the condition of receipt of online information and database access or retrieval services (OIDAR) for purposes other than commerce, industry or any other business or profession so as to provide for taxability of OIDAR service provided by any person located in nontaxable territory to an unregistered person receiving the said services and located in the taxable territory. Further, it also seeks to clarify that the persons registered solely in terms of clause (vi) of Section 24 of CGST Act shall be treated as unregistered person for the purpose of the said clause.
Also, clause (17) of the said section is being amended to revise the definition of “online information and database access or retrieval services” to remove the condition of rendering of the said supply being essentially automated and involving minimal human intervention.
for more details visit: http://www.cachandru.in
14. Section 12 of IGST Act - Removal of proviso to charge tax on the supply of transport service irrespective of destination of goods where supplier and recipient both are located in India. |
Background : Section 12 of IGST Act deals with place of supply of services where location of supplier and recipient is in India.
Changes : Proviso to sub-section (8) of section 12 of the IGST Act is being omitted so as to specify the place of supply, irrespective of destination of the goods, in cases where the supplier of services and recipient of services are located in India.
for more details visit: http://www.cachandru.in
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