Changes are made in pursuance of the change in name of CBEC to CBIC.

Further, the National Anti-Profiteering Authority constituted under Section 171 of the CGST Act is also excluded from the definition of 'adjudicating authority'.

"business" includes--

"business" includes--

"local authority" means--

"local authority" means--

Development board constituted Article 371J of the Constitution will now be considered as local authority.

Note: Article 371J grants special status to 6 backward districts of Karnataka-Hyderabad region by empowering the President to establish a separate Board to ensure equitable distribution of funds in the State's budget to meet the developmental needs of the region.

"services" means anything other than goods, money and securities but includes activities relating to the use of money or its conversion by cash or by any other mode, from one form, currency or denomination, to another form, currency or denomination for which a separate consideration is charged;

"services" means anything other than goods, money and securities but includes activities relating to the use of money or its conversion by cash or by any other mode, from one form, currency or denomination, to another form, currency or denomination for which a separate consideration is charged;

Explanation. -- For the removal of doubts, it is hereby clarified that the expression "services" includes facilitating or arranging transactions in securities;'.

This explanation provides clarity that although 'securities' [s. 2(h) of Securities Contract Regulations Act, 1956] are excluded from the definition of 'goods' and 'services' in the CGST Act, but if some service charges or service fees or documentation fees or broking charges or such like fees or charges are charged in relation to transactions in securities, the same would be a consideration for provision of service and chargeable to GST.

What additionally could have been done:

Definition of services could have further been amended to treat 'intangible goods' as services.  

(1) For the purposes of this Act, the expression "supply" includes--  

(a) all forms of supply of goods or services or both such as sale, transfer, barter, exchange, licence, rental, lease or disposal made or agreed to be made for a consideration by a person in the course or furtherance of business;

(b) import of services for a consideration whether or not in the course or furtherance of business;

(c) the activities specified in Schedule I, made or agreed to be made without a consideration; and

(d) the activities to be treated as supply of goods or supply of services as referred to in Schedule II. 

(2) Notwithstanding anything contained in sub-section (1), --  

(a) activities or transactions specified in Schedule III; or

(b) such activities or transactions undertaken by the Central Government, a State Government or any local authority in which they are engaged as public authorities, as may be notified by the Government on the recommendations of the Council, shall be treated neither as a supply of goods nor a supply of services.

(3) Subject to the provisions of sub-sections (1) and (2), the Government may, on the recommendations of the Council, specify, by notification, the transactions that are to be treated as-

(a) a supply of goods and not as a supply of services; or

(b) a supply of services and not as a supply of goods.

(1) For the purposes of this Act, the expression "supply" includes-  

(a) all forms of supply of goods or services or both such as sale, transfer, barter, exchange, licence, rental, lease or disposal made or agreed to be made for a consideration by a person in the course or furtherance of business;

(b) import of services for a consideration whether or not in the course or furtherance of business; and

(c) the activities specified in Schedule I made or agreed to be made without a consideration, and

(d) the activities to be treated as supply of goods or supply of services as referred to in Schedule II.  

(1A) where certain activities or transactions constitute a supply in accordance with the provisions of sub-section (1), they shall be treated either as supply of goods or supply of services as referred to in Schedule II.  

(2) …………  

(3) Subject to the provisions of sub-sections (1), (1A) and (2), the Government may, on the recommendations of the Council, specify, by notification, the transactions that are to be treated as-  

(a) a supply of goods and not as a supply of services; or

Retrospective application w.e.f. 01.07.2017

Term 'supply' is amended to exclude activities/ transactions listed in Schedule II to ensure that the activities/ transactions as per Schedule II is to determine only whether the same is supply of goods or services. Hence, activities/ transactions listed in Schedule II (as supply of service or supply of goods) shall be taxed only when they constitute 'supply' in accordance with provisions of Section 7(1)(a), (b) and (c) of the CGST Act.

Amendments in definition of 'supply' are made retrospectively applicable. Thus, there shall not be any past litigation on account of any transaction merely covered under Schedule II, but otherwise not a 'supply'.

What additionally could have been done:

- Inclusive definition of supply must be made concrete with no subjectivity;

- Clarity must be provided on concept of composite and mixed supply as to manner of determining principal supply and dominant intention;

The central tax in respect of the supply of taxable goods or services or both by a supplier, who is not registered, to a registered person shall be paid by such person on reverse charge basis as the recipient and all the provisions of this Act shall apply to such recipient as if he is the person liable for paying the tax in relation to the supply of such goods or services or both.  

The Government may, on the recommendations of the Council, by notification, specify a class of registered persons who shall, in respect of supply of specified categories of goods or services or both received from an unregistered supplier, pay the tax on reverse charge basis as the recipient of such supply of goods or services or both, and all the provisions of this Act shall apply to such recipient as if he is the person liable for paying the tax in relation to such supply of goods or services or both".

Earlier Section 9(4) of the CGST Act has been omitted and instead, an enabling power is granted for the Govt. to notify a class of registered persons who would be liable to pay tax on reverse charge basis in case of receipt of specified categories of goods or services or both (as against taxable goods or services or both) from an unregistered supplier.

The details of such specified persons and specified goods/services are to be notified in future.

What additionally could have been done:

(1) Notwithstanding anything to the contrary contained in this Act but subject to the provisions of sub-sections (3) and (4) of section 9, a registered person, whose aggregate turnover in the preceding financial year did not exceed fifty lakh rupees, may opt to pay, in lieu of the tax payable by him, an amount calculated at such rate as may be prescribed, but not exceeding, --

(a) one per cent. of the turnover in State or turnover in Union territory in case of a manufacturer,

(b) two and a half per cent. of the turnover in State or turnover in Union territory in case of persons engaged in making supplies referred to in clause (b) of paragraph 6 of Schedule II, and

(c) half per cent. of the turnover in State or turnover in Union territory in case of other suppliers,  

subject to such conditions and restrictions as may be prescribed:  

Provided that the Government may, by notification, increase the said limit of fifty lakh rupees to such higher amount, not exceeding one crore rupees, as may be recommended by the Council.

(2) The registered person shall be eligible to opt under sub-section (1), if: -

(a) he is not engaged in the supply of services other than supplies referred to in clause (b) of paragraph 6 of Schedule II;

(b) he is not engaged in making any supply of goods which are not leviable to tax under this Act;

(c) he is not engaged in making any inter-State outward supplies of goods;

Provided that where more than one registered persons are having the same Permanent Account Number (issued under the Income-tax Act, 1961), the registered person shall not be eligible to opt for the scheme under sub-section (1) unless all such registered persons opt to pay tax under that sub-section.  

(3) The option availed of by a registered person under sub-section (1) shall lapse with effect from the day on which his aggregate turnover during a financial year exceeds the limit specified under sub-section (1).  

(4) A taxable person to whom the provisions of sub-section (1) apply shall not collect any tax from the recipient on supplies made by him nor shall he be entitled to any credit of input tax.  

(1) Notwithstanding anything to the contrary contained in this Act but subject to the provisions of sub-sections (3) and (4) of section 9, a registered person, whose aggregate turnover in the preceding financial year did not exceed fifty lakh rupees, may opt to pay, in lieu of the tax payable by him under sub-section (1) of section 9, an amount of tax calculated at such rate as may be prescribed, but not exceeding,--

(a) one per cent of the turnover in State or turnover in Union territory in case of a manufacturer,

(b)  two and a half per cent. of the turnover in State or turnover in Union territory in case of persons engaged in making supplies referred to in clause (b) of paragraph 6 of Schedule II, and

(c) half per cent. of the turnover in State or turnover in Union territory in case of other suppliers, 

subject to such conditions and restrictions as may be prescribed:  

Provided that the Government may, by notification, increase the said limit of fifty lakh rupees to such higher amount, not exceeding one crore and fifty lakh crore rupees, as may be recommended by the Council.  

"Provided further that a person who opts to pay tax under clause (a) or clause (b) or clause (c) may supply services (other than those referred to in clause (b) of paragraph 6 of Schedule II), of value not exceeding ten per cent. of turnover in a State or Union territory in the preceding financial year or five lakh rupees, whichever is higher."; 

(2) The registered person shall be eligible to opt under sub-section (1), if-  

(b) …………….

This amendment gives effect to the earlier decision of the GST Council to increase threshold limit for the composition suppliers from INR 1 crore to 1.5 crores and further to enable registered manufacturers and traders to opt for composition scheme u/s 10(1) of the CGST Act even if they supply services of value not exceeding 10% of the turnover in a State/Union territory in the preceding FY or INR 5 lakhs, whichever is higher [Presently, registered persons engaged in the supply of services (other than restaurant services) are not eligible for the composition scheme]

The amendment also allows supply of services to the extent of above specified limits, apart from services referred in Para 6(b) of Schedule II i.e. restaurant services. This change seems to be inserted in view of clause (b) of Section 10. Clause (b) mentions about composite rate of tax on restaurant service providers. It clarifies that for clause (b), this limit shall apply for services supplied other than restaurant services.

What additionally could have been done:  

- It should be clarified that this amount of 10% of turnover in preceding financial year or INR 5 Lakhs, whichever is higher, should only be the taxable value of services - Order No. 01/2017 dated 13.10.2017 already clarifies that person supplying exempt services along with goods or restaurant services are not ineligible for composition levy;

- Clarification is required on nature of supply of services - Whether inter-state supply of services will be allowed;

- Clarification is required as to what could be the rate of tax on such supply of services- composition rate or actual rate of tax;

- It is suggested that certain percentage of turnover may be allowed for inter-state supply of goods for the benefit of SME/MSME sector in true sense.

4. Import of services by a taxable person from a related person or from any of his other establishments outside India, in the course or furtherance of business

6. Actionable claims, other than lottery, betting and gambling.

Explanation. - For the purposes of paragraph 2, the term "court" includes District Court, High Court and Supreme Court.

6. Actionable claims, other than lottery, betting and gambling.

7. Supply of goods from a place in the non-taxable territory to another place in the non-taxable territory without such goods entering into India.

8. (a) Supply of warehoused goods to any person before clearance for home consumption;

(b) Supply of goods by the consignee to any other person, by endorsement of documents of title to the goods, after the goods have been dispatched from the port of origin located outside India but before clearance for home Consumption.

Explanation. 1 - For the purposes of paragraph 2, the term "court" includes District Court, High Court and Supreme Court.

Explanation 2. -- For the purposes of paragraph 8, the expression "warehoused goods" shall have the same meaning as assigned to it in the Customs Act, 1962.

The scope of Schedule III is expanded to include merchant trading, supply of goods in the course of High Seas Sale and Sale of imported warehoused goods. Thus, these transactions shall nether be treated a supply of goods nor supply of services. Further, there shall be no reversal of common credit on account of these supplies.

What additionally could have been done:

-  Amendments in Schedule III should have been made effective retrospectively from 01.07.2017;

-  Relief in the form of possible refunds should be granted for the tax already paid earlier on sale of goods from custom bonded warehouse;

-  Inter-Company supply of services provided by Head office to branch office/ representative office of the same legal entity having a common PAN located in the taxable territory or vice versa should be included in Schedule III so that the same does not qualify as supply of services liable to GST, like centralized functions of accounting, legal, HR etc., carried out by HO;

- Duty credit scrips viz. MEIS/ SEIS, issued on export of goods/ services are presently treated as exempted goods and therefore are subject to reversal of credit provisions. As an encouragement to exporters, these Duty credit scrips should be included here as neither supply of goods nor services.