Clause by clause analysis of changes in GST vide Finance Bill 2020

Clause by clause analysis of changes in GST vide Finance Bill 2020

 

Clauses of the finance bill, 2020Changes in the sectionCorresponding Act
116Amendment of section 2CGST Act
117Amendment of section 10CGST Act
118Amendment of section 16CGST Act
119Amendment of section 29CGST Act
120Amendment of section 30CGST Act
121Amendment of section 31CGST Act
122Amendment of section 51CGST Act
123Amendment of section 109CGST Act
124Amendment of section 122CGST Act
125Amendment of section 132CGST Act
126Amendment of section 140CGST Act
127Amendment of section 168CGST Act
128Amendment of section 172CGST Act
129Amendment to Schedule IICGST Act
130Retrospective exemption from, or levy or collection of, central tax
in certain cases
CGST Act
131Retrospective effect to notification issued under clause (ii) of
proviso to sub-section (3) of section 54 of CGST Act
CGST Act
132Amendment of section 25IGST Act
133Retrospective exemption from, or levy or collection of, integrated
tax in certain cases
IGST Act
134Amendment of section 1UTGST Act
135Amendment of section 2UTGST Act
136Amendment of section 26UTGST Act
137Retrospective exemption from, or levy or collection of, Union
territory tax in certain cases
UTGST Act
138Amendment of section 14GST (Compensation to States)

1.
As per Clause 116 of Finance Bill 2020 – In section 2 of CGST Act, 2017, in
clause (114), for clauses (c) and (d), the following clauses shall be
substituted, namely:-

“(c) Dadra and Nagar Haveli and Daman and Diu; (d) Ladakh;”

Comment – Ladakh has been inserted as Union Territory in the definition
clause.

2.
As per Clause 117 of Finance Bill 2020 – In section 10 of CGST Act, in
sub-section (2), in clauses (b), (c) and (d), after the words “of goods”, the
words “or services” shall be inserted.

Comment– In the restriction list for Composition Levy, the word services has
been added along with goods. Therefore now the supplier of services, providing
the inter state services or supply through E Commerce Operator or services which
are not leviable to tax, are not eligible to take composition Levy.

3.
As per Clause 118 of Finance Bill 2020 – In section 16 of CGST Act, in
sub-section (4), the words “invoice relating to such” shall be omitted.

Comment – As per the Existing provision of Sec 16(4)- “A registered person
shall not be entitled to take input tax credit in respect of any invoice or
debit note for supply of goods or services or both after the due date of
furnishing of the return under section
39
for the month of September following the end of financial year to
which such invoice or invoice relating to such debit not epertains
or furnishing of the relevant annual return, whichever is earlier.[See
Rule 37(4)]

4.
As per Clause 119 of Finance Bill 2020 – In section 29 of CGST Act, in
sub-section (1), for clause (c), the following clause shall be substituted,
namely:- –

“(c) the taxable person is no longer liable to be registered under section 22
or section 24 or intends to opt out of the registration voluntarily made under
sub-section (3) of section 25:”.

Comment – As per Existing Provision of Sec 29(1)(c) the taxable person, other
than the person registered under sub-section (3) of section
25
, is no longer liable to be registered under section
22
or section
24
.Now the person, who has taken registration voluntarily, can also
apply for Cancellation of Registration.

Brief History – Prior to 23rd Jan 2018, no application for cancellation of
registration can be made before the expiry of 1 year by the registered person
taken registration voluntarily (Proviso to Rule 20(2)]. With the omission of
this proviso vide Notification No 3/2018 – Central Tax dated 23rd Jan 2018, such
person can submit the application for cancellation at any time after the date of
registration.

5.
As per Clause 120 of Finance Bill 2020 – In section 30 of CGST Act, in
sub-section (1), for the proviso, the following proviso shall be substituted,
namely:-

“Provided that such period may, on sufficient cause being shown, and for
reasons to be recorded in writing, be extended,-

(a) by the Additional Commissioner or the Joint Commissioner, as the case may
be, for a period not exceeding thirty days;
(b) by the Commissioner, for a further period not exceeding thirty days, beyond
the period specified in clause (a).”

Comment – Revocation Period can be extended by Additional Commissioner/ Joint
Commissioner by 30 days. This can be further extended by another 30 days (So
total 60 days) by Commissioner.

6.
As per Clause 121 of Finance Bill 2020 – In section 31 of CGST Act, in
sub-section (2), for the proviso, the following proviso shall be substituted,
namely:- –

“Provided that the Government may, on the recommendations of the Council, by
notification,- –

(a) specify the categories of services or supplies in respect of which a tax
invoice shall be issued, within such time and in such manner as may be
prescribed;

(b) subject to the condition mentioned therein, specify the categories of
services in respect of which- – (i) any other document issued in relation to the
supply shall be deemed to be a tax invoice; or (ii) tax invoice may not be
issued.”.

Comment – Existing proviso has been divided in two clauses giving the power to Govt for issuance of notifications.

In clause (a), Govt can specify the time limit and manner to issue the
invoice for certain category of services and

In the clause (b) Govt can notify that any document will be considered as Tax
Invoice or Tax invoice is not at all require for certain category of services.

7.
As per Clause 122 of Finance Bill 2020 – In section 51 of CGST Act,-

(a) For sub-section (3), the following sub-section shall be substituted,
namely:- “(3) A certificate of tax deduction at source shall be issued in such
form and in such manner as may be prescribed.”

(b) Sub-section (4) shall be omitted.”

Comment:– The existing provision require “Deductor shall furnish to the
deductee a certificate mentioning therein the contract value, rate of deduction,
amount deducted, amount paid to the Government and such other particulars in
such manner as may be prescribed.

Now the language has been modify and simply linked to rule without specifying
any particular in the section itself.

Further there is a late fee of Rs 100 per day subject to a maximum of Rs5,000
under section 51(4) of CGST Act for not furnishing the TDS Certificate within 5
days, has been omitted

8.
As per Clause 123 of Finance Bill 2020 – In section 109 of CGST Act, in
sub-section (6),-

(a) the words “except for the State of Jammu and Kashmir” shall be omitted;

(b) the first proviso shall be omitted.

Comment: – Section 109 is talking about Constitution of Appellate Tribunal and
Benches thereof and necessary changes has been made for J&K.

9.
As per Clause 124 of Finance Bill 2020 – In section 122 of CGST Act, after
sub-section (1), the following sub-section shall be inserted, namely:-

“(1A) Any person who retains the benefit of a transaction covered under
clauses (i), (ii), (vii) or clause (ix) of sub-section (1)and at whose instance
such transaction is conducted, shall be liable to a penalty of an amount
equivalent to the tax evaded or input tax credit availed of or passed on.”

Comment: – Penalty for offences like Bogus Invoices, ITC on such
Invoices etc has been extended to such person who retains the benefit and at
whose instance such transaction is conducted. Penalty is equal to the tax evaded
or ITC taken.

10. As per Clause 125
of Finance Bill 2020 – In section 132 of CGST Act, in
sub-section (1),-

(i)For the words “Whoever commits any of the following offences”, the words
“Whoever commits, or causes to commit and retain the benefits arising out of,
any of the following offences’’ shall be substituted;

(ii) For clause (c), the following clause shall be substituted, namely:- –

“(c) avails input tax credit using the invoice or bill referred to in clause
(b) or fraudulently avails input tax credit without any invoice or bill;”;

(iii) In sub-clause (e), the words, “fraudulently avails input tax credit”
shall be omitted.

Comment:

Prosecution has been extended to the person who commit or case to commit such
offences. Also prosecution will be given to the person who retains the benefit
from these offences.

Fraudulently avails input tax credit without any invoice or bill was mentioned
earlier in the clause (e.) of Section 132(1) and now it has been omitted from
there and added in the clause (b).

11. As per Clause 126
of Finance Bill 2020 -In section 140 of CGST Act, with effect from the 1st day
of July, 2017,-

(a) in sub-section (1), after the words “existing law”, the words “within
such time and” shall be inserted and shall be deemed to have been inserted;

(b) in sub-section (2), after the words “appointed day”, the words “within
such time and” shall be inserted and shall be deemed to have been inserted;

(c) in sub-section (3), for the words “goods held in stock on the appointed
day subject to”, the words “goods held in stock on the appointed day, within
such time and in such manner as may be prescribed, subject to” shall be
substituted and shall be deemed to have been substituted;

(d) in sub-section (5), for the words “existing law”, the words “existing
law, within such time and in such manner as may be prescribed” shall be
substituted and shall be deemed to have been substituted;

(e) in sub-section (6), for the words “goods held in stock on the appointed
day subject to”, the words “goods held in stock on the appointed day, within
such time and in such manner as may be prescribed, subject to” shall be
substituted and shall be deemed to have been substituted;

(f) in sub-section (7), for the words “credit under this Act even if”, the
words “credit under this Act, within such time and in such manner as may be
prescribed, even if” shall be substituted and shall be deemed to have been
substituted;

(g) in sub-section (8), for the words “in such manner”, the words “within
such time and in such manner” shall be substituted and shall be deemed to have
been substituted;

(h) in sub-section (9), for the words “credit can be reclaimed subject to”,
the words “credit can be reclaimed within such time and in such manner as may be
prescribed, subject to” shall be substituted and shall be deemed to have been
substituted.

Comment:

The word with in Such Time and Such manner has been added in Section 140,
which means that the time limit can also be prescribed by the Govt. There may be
certain relaxation by way of extension for TRAN-1 and TRAN-2 filling.

12. As per Clause 127
of Finance Bill 2020 -In section 168 of CGST Act, in sub-section (2), for the
words, brackets and figures “sub-section (5) of section 66, sub-section (1) of
section 143”, the words, brackets and figures “sub-section (1) of section 143,
except the second proviso thereof” shall be substituted.

Comment: – The commissioner specified in the second proviso to Section 143
will not be covered in Section 168. Second Proviso to Section 143(1) of CGST Act
is as under –

[Provided further that the period of one year and three years may, on
sufficient cause being shown, be extended by the Commissioner for a further
period not exceeding one year and two years respectively.]

13. As per Clause 128
of Finance Bill 2020 -In section 172 of CGST Act, in sub-section (1), in the
proviso, for the words “three years”, the words “five years” shall be
substituted.

Comment:– Time period has been extended from 3 years to 5 years to issue the
Order. This means that certain relaxation will be given by issuance of Removal
of Difficulty Order.

14. As per Clause 129
of Finance Bill 2020 -In Schedule II to CGST Act, in paragraph 4, the words
“whether or not for a consideration,” at both the places where they occur, shall
be omitted and shall be deemed to have been omitted with effect from the 1st day
of July, 2017

Comment: – With and without Consideration word has been deleted in clause 4
of schedule II i.e. ‘Transfer of Business Assets’ with
retrospective effect from 1st July 2017.

15. Retrospective
exemption from, or levy or collection of, central tax in certain cases – As per
Clause 130 of Finance Bill 2020(1) Notwithstanding anything contained in the
notification issued by the Central Government, on the recommendations of the
Council, in exercise of the powers under sub-section (1) of section 9 of CGST
Act, 2017-

(i) no central tax shall be levied or collected in respect of
supply of fishmeal (falling under heading 2301), during the period commencing
from the 1st day of July, 2017 and ending with the 30th day of September, 2019
(both days inclusive);

(ii) Central tax at the rate of six per cent. shall be levied or
collected in respect of supply of pulley, wheels and other parts (falling under
heading 8483) and used as parts of agricultural machinery (falling under
headings 8432, 8433 and 8436), during the period commencing from the 1st day of
July, 2017 and ending with the 31st day of December, 2018 (both days inclusive).

(2) No refund shall be made of all such tax which has been collected, but
which would not have been so collected, had sub-section (1) been in force at all
material times.

Comment:

1.
Exemption on Supply of fishmeal has been given retrospectively from 1st July
2017 to till 30th Sep’ 2019

2.
6% CGST Rate for supply of pulley, wheels and other parts and used as parts of
agricultural machinery has been specified from 1st July 2017 to till
31st Dec’ 2018.

3.
No refund shall be made.

16. As per Clause 131
of Finance Bill 2020 The notification dated the 30th September, 2019, issued by
the Central Government, in exercise of the powers under clause (ii) of the
proviso to sub-section (3) of section 54 of CGST Act, 2017, read with
sub-section (2) of section 9 of GST (Compensation to States) Act, 2017, shall be
deemed to have, and always to have, for all purposes, come into force on and
from the 1st day of July, 2017.

Comment: – Notification No.3/2019-Compensation Cess (Rate) dated 30th
September, 2019 has been issued to prescribe that no refund of unutilised input
tax credit of compensation cess shall be allowed on ‘Tobacco and manufactured
tobacco substitutes’. This restriction is effective from 1st July 2017.

Integrated Goods and Services Tax

17. As per Clause 132
of Finance Bill 2020 In section 25 of the Integrated Goods and Services Tax Act,
2017, in sub-section (1), in the proviso, for the words “three years”, the words
“five years” shall be substituted.

Comment: – Similar to the clause 128 as explained above, Time period has been
extended from 3 years to 5 years to issue the Order. This means that certain
relaxation will be given by issuance of Removal of Difficulty Order.

18. As per Clause 133
of Finance Bill 2020- Same as Clause 130 (explained above) for Retrospective
exemption from, or levy or collection of, central tax in certain cases.

Union Territory Goods and Services Tax

19. As per Clause 134
of Finance Bill 2020 In section 1 of UTGST Act, 2017, in sub-section (2), for
the words “Dadra and Nagar Haveli, Daman and Diu”, the words “Dadra and Nagar
Haveli and Daman and Diu, Ladakh” shall be substituted

Comment – Ladakh has been inserted as Union Territory.

20. As per Clause
135 of Finance Bill 2020 In section 2 of the UTGST Act, in clause (8), for
sub-clauses (iii) and (iv), the following sub-clauses shall be substituted,
namely:- – “(iii) Dadra and Nagar Haveli and Daman and Diu; (iv) Ladakh;”.

Comment: – Similar to the clause 116 (explained above), Ladakh has been
inserted as Union Territory in the definition clause.

21. As per Clause 136
of Finance Bill 2020 In section 26 of the UTGST Act, in sub-section (1), in the
proviso, for the words “three years”, the words “five years” shall be
substituted.

Comment: – Similar to the clause 128 as explained above, Time period has been
extended from 3 years to 5 years to issue the Removal of Difficulty Order.

22. As per Clause
137 of Finance Bill 2020 Same as Clause 130 (explained above) for Retrospective
exemption from, or levy or collection of, central tax in certain cases.

Goods and Services Tax (Compensation to States)

23. As per Clause
138 of Finance Bill 2020 In section 14 of the GST (Compensation to States) Act,
2017, in sub-section (1), in the proviso, for the words “three years”, the words
“five years” shall be substituted.

Comment: – Similar to the clause 128 as explained above, Time period has been
extended from 3 years to 5 years to issue the Removal of Difficulty Order.

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