Comparative insight into the amended CGST and IGST Acts - Part IV
SEPTEMBER 17, 2018
By Bimal Jain, FCA, FCS, LLB & Isha Bansal, ACS, LLB
 IN Part IV of the Table we are discussing the amendments in other provisions like Job work, recovery of tax, detention and seizure, Appeals to Appellate Authority and Appellate Tribunal etc. along with the amendments made in the IGST Act, 2017 in section-wise tabular presentation of amended CGST Act, 2017 and IGST Act, 2017 in comparison with the present Acts.
Amendments in all other provisions viz. supply along with various schedules, composition scheme, reverse charge, availment and utilization of input tax credit, GST returns, refund, registration etc. are discussed in detail in Part I to III of the article.
Trust you will find the same useful.
Synopsis of the CGST Amendment Act, 2018
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Provision as per present CGST Act, 2017
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Provision of CGST Act, 2017 as per the CGST Amendment Act, 2018
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Effect of amendment along with analysis as to comparison
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Section 35(5) - Accounts and other records
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35 (5) 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.
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35 (5) 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:
Provided 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.
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This amendment provides that any department of the Central or State Government/local authority which is subject to audit by CAG need not get their books of account audited by any CA or CMA.
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Section 48(2) - GST Practitioner
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48 (2) A registered person may authorise an approved goods and services tax practitioner to furnish the details of outward supplies under section 37, the details of inward supplies under section 38 and the return under section 39 or section 44 or section 45 in such manner as may be prescribed.
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48 (2) A registered person may authorise an approved goods and services tax practitioner to furnish the details of outward supplies under section 37, the details of inward supplies under section 38 and the return under section 39 or section 44 or section 45, and to perform such other functions in such manner as may be prescribed.
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This amendment allows the GST practitioner to perform other functions such as, filing refund claim, filing application for cancellation of registration etc., apart from furnishing the details of outward and inward supplies and various returns on behalf of a registered person.
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Section 52(9) - Collection of tax at source
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52 (9) Where the details of outward supplies furnished by the operator under sub-section (4) do not match with the corresponding details furnished by the supplier under section 37, the discrepancy shall be communicated to both persons in such manner and within such time as may be prescribed.
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(9) Where the details of outward supplies furnished by the operator under sub-section (4) do not match with the corresponding details furnished by the supplier under section 37 section 37 or section 39, the discrepancy shall be communicated to both persons in such manner and within such time as may be prescribed.
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Amendment is made to include reference of returns filed under Section 39 by the supplier.
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Section 79(4)- Recovery of tax
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79 (4) Where the amount recovered under sub-section (3) is less than the amount due to the Central Government and State Government, the amount to be credited to the account of the respective Governments shall be in proportion to the amount due to each such Government.
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79 (4) Where the amount recovered under sub-section (3) is less than the amount due to the Central Government and State Government, the amount to be credited to the account of the respective Governments shall be in proportion to the amount due to each such Government.
Explanation. - For the purposes of this section, the word person shall include "distinct persons" as referred to in sub-section (4) or, as the case may be, sub-section (5) of section 25.
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This amendment provides that recovery may be made from distinct persons present in different States / UTs in order to ensure speedy recovery from other establishments of the registered person.
This amendment is anti-industry and will be retrograde in nature. Operation of units in other states should not be affected if there are disputes in one state and a consequent recovery. This should have been dropped in the interest of industry.
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Section 107(6) & 112(8) - Appeal to Appellate Authority and Appellate Tribunal
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107 (6) No appeal shall be filed under sub-section (1), unless the appellant has paid-
(a) 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
(b) a sum equal to ten per cent. of the remaining amount of tax in dispute arising from the said order, in relation to which the appeal has been filed.
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107 (6) No appeal shall be filed under sub-section (1), unless the appellant has paid-
(a) 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
(b) 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.
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This amendment put a ceiling on the limit of the amount to be deposited before filing an appeal to the appellate authority u/s 107 (6) which is 10% of the disputed tax amount subject to maximum limit of INR 25 crores. Further, the maximum amount to be deposited to file appeal from the appellate authority [u/s 112(8)] to appellate tribunal is 20% of the disputed tax amount along with the amount deposited u/s 107(6) subject to maximum of INR 50 crores
What additionally could have been done:
Keeping such high pre-deposit amount of 10%/20% with maximum ceiling as high as INR 50 crores/ 100 crores [CGST + SGST/UTGST] will cause undue hardship on innocent assesses having genuine case and not easing business for SME/ MSME Sectors.
Pre-deposit amount under GST also should be 7.5% at first level of appeal and 2.5% at second level, totalling together 10% of disputed tax amount subject to maximum of INR 10 Crores, as was in Service tax and Excise era.
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112 (8) No appeal shall be filed under sub-section (1), unless the appellant has paid-
(a) 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
(b) a sum equal to twenty per cent. of the remaining amount of tax in dispute, in addition to the amount paid under sub-section (6) of section 107, arising from the said order, in relation to which the appeal has been filed.
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112 (8) No appeal shall be filed under sub-section (1), unless the appellant has paid-
(a) 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
(b) a sum equal to twenty per cent. of the remaining amount of tax in dispute, in addition to the amount paid under sub-section (6) of section 107, arising from the said order subject to a maximum of twenty-five crore rupees , in relation to which the appeal has been filed.
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Section 129(6) - Detention, seizure and release of goods and conveyances in transit
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129 (6) Where the person transporting any goods, or the owner of the goods fails to pay the amount of tax and penalty as provided in sub-section (1) within seven days of such detention or seizure, further proceedings shall be initiated in accordance with the provisions of section 130:
Provided that 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 seven days may be reduced by the proper officer.
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129 (6) Where the person transporting any goods, or the owner of the goods fails to pay the amount of tax and penalty as provided in sub-section (1) within seven days fourteen days of such detention or seizure, further proceedings shall be initiated in accordance with the provisions of section 130:
Provided that 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 seven days fourteen days may be reduced by the proper officer.
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It seeks to increase the time limit before which proceedings under Section 130 can be initiated from seven to fourteen days.
What additionally could have been done:
- Section 129 must be amended to restrict levying of penalties only in cases where there is intent to evade taxes;
- Further, suitable provision must be incorporated which allows releasing of goods without levying penalty once the proof of payment of appropriate tax is shown or a mere technical breach is shown;
- E-Way Bill compliance must be made little easy for small taxpayers upto specified turnover by prescribing simple form with lesser details.
- Alternatively, threshold of consignment value exceeding INR 50,000/- requiring generating of E-Way Bill may be increased to INR 2 Lakh per consignment basis for small taxpayers.
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Section 143(1)(b) - Job work procedure
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143 (1) A registered person (hereafter in this section referred to as the "principal") may under intimation and subject to such conditions as may be prescribed, send any inputs or capital goods, without payment of tax, to a job worker for job work and from there subsequently send to another job worker and likewise, and shall, -
(a) bring back inputs, after completion of job work or otherwise, or capital goods, other than moulds and dies, jigs and fixtures, or tools, within one year and three years, respectively, of their being sent out, to any of his place of business, without payment of tax;
(b) supply such inputs, after completion of job work or otherwise, or capital goods, other than moulds and dies, jigs and fixtures, or tools, within one year and three years, respectively, of their being sent out from the place of business of a job worker on payment of tax within India, or with or without payment of tax for export, as the case may be:
Provided that the principal shall not supply the goods from the place of business of a job worker in accordance with the provisions of this clause unless the said principal declares the place of business of the job worker as his additional place of business except in a case-
(i) where the job worker is registered under section 25; or
(ii) where the principal is engaged in the supply of such goods as may be notified by the Commissioner.
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143 (1) A registered person (hereafter in this section referred to as the "principal") may under intimation and subject to such conditions as may be prescribed, send any inputs or capital goods, without payment of tax, to a job worker for job work and from there subsequently send to another job worker and likewise, and shall, -
(a) bring back inputs, after completion of job work or otherwise, or capital goods, other than moulds and dies, jigs and fixtures, or tools, within one year and three years, respectively, of their being sent out, to any of his place of business, without payment of tax;
(b) supply such inputs, after completion of job work or otherwise, or capital goods, other than moulds and dies, jigs and fixtures, or tools, within one year and three years, respectively, of their being sent out from the place of business of a job worker on payment of tax within India, or with or without payment of tax for export, as the case may be:
Provided that the principal shall not supply the goods from the place of business of a job worker in accordance with the provisions of this clause unless the said principal declares the place of business of the job worker as his additional place of business except in a case-
(i) where the job worker is registered under section 25; or
(ii) where the principal is engaged in the supply of such goods as may be notified by the Commissioner.
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.
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In terms of Section 143 of the CGST Act, a registered person (principal) is allowed to send inputs or capital goods to a job worker for job work without payment of tax subject to the conditions inter-alia, that the inputs and capital goods are brought back within a period of one year and three years respectively.
Now, a proviso is inserted in Section 143 to provide that the period of one year or 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.
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Synopsis of the IGST Amendment Act, 2018
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Provision as per present IGST Act, 2017
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Effect of amendment along with analysis as to comparison
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Section 2(6) - Definition of 'Export of services'
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2 (6) "export of services" means the supply of any service when, -
(i) the supplier of service is located in India;
(ii) the recipient of service is located outside India;
(iii) the place of supply of service is outside India;
(iv) the payment for such service has been received by the supplier of service in convertible foreign exchange; and
(v) the supplier of service and the recipient of service are not merely establishments of a distinct person in accordance with Explanation 1 in section 8.
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(6) "export of services" means the supply of any service when, -
(i) the supplier of service is located in India;
(ii) the recipient of service is located outside India;
(iii) the place of supply of service is outside India;
(iv) the payment for such service has been received by the supplier of service in convertible foreign exchange or in Indian Rupees wherever permitted by the Reserve Bank of India; and
(v) the supplier of service and the recipient of service are not merely establishments of a distinct person in accordance with Explanation 1 in section 8.
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This amendment allows receipt of payment in Indian rupees in case of export of services wherever permitted by the RBI. This is a taxpayer-friendly measure.
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Explanation to Section 2(16) - Meaning of 'governmental authority'
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2 (16) "non-taxable online recipient" means any Government, local authority, governmental authority, an individual or any other person not registered and receiving online information and database access or retrieval services in relation to any purpose other than commerce, industry or any other business or profession, located in taxable territory.
Explanation. - For the purposes of this clause, the expression "governmental authority" means an authority or a board or any other body, -
(i) set up by an Act of Parliament or a State Legislature; or
(ii) established by any Government, with ninety per cent. or more participation by way of equity or control, to carry out any function entrusted to a municipality under article 243W of the Constitution;.
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2 (16) "non-taxable online recipient" means any Government, local authority, governmental authority, an individual or any other person not registered and receiving online information and database access or retrieval services in relation to any purpose other than commerce, industry or any other business or profession, located in taxable territory.
Explanation. - For the purposes of this clause, the expression 'governmental authority' means "an authority or a board or any other body, -
(i) set up by an Act of Parliament or a State Legislature; or
(ii) established by any Government, with ninety per cent. or more participation by way of equity or control, to carry out any function entrusted to a Panchayat under article 243G or municipality under article 243W of the Constitution.
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The reference to Panchayat under Article 243G is sought to be added in the definition of Governmental authority.
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Section 5(4) - Reverse charge on procurements made from unregistered suppliers
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(4) The integrated 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.
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(4) The integrated 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.
(4) 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.
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This omits Section 5(4) of the IGST Act and instead, grant an enabling power 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 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:
Operation of Section 5(4) in its present form, is not conducive as the registered recipient requires to raise self-invoice, capturing individual HSN/ SAC codes for procurement of specified goods or services, which is operationally not easing business and should be done away completely.
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Explanation to Section 8 - Establishments of distinct persons
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Explanation 1. - For the purposes of this Act, where a person has, -
(i) an establishment in India and any other establishment outside India;
(ii) an establishment in a State or Union territory and any other establishment outside that State or Union territory; or
(iii) an establishment in a State or Union territory and any other establishment being a business vertical registered within that State or Union territory, then such establishments shall be treated as establishments of distinct persons.
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Explanation 1. - For the purposes of this Act, where a person has, -
(i) an establishment in India and any other establishment outside India;
(ii) an establishment in a State or Union territory and any other establishment outside that State or Union territory; or
(iii) an establishment in a State or Union territory and any other establishment being a business vertical registered within that State or Union territory, then such establishments shall be treated as establishments of distinct persons.
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Amendment is made to align with the CGST Amendment Act, 2018 which allows more than registration in a state or union territory by removing the requirement of having multiple business verticals.
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Section 12(8) - Place of supply of domestic services of transportation of goods
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12 (8) The place of supply of services by way of transportation of goods, including by mail or courier to, -
(a) a registered person shall be the location of such person;
(b) a person other than a registered person, shall be the location at which such goods are handed over for their transportation.
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12 (8) The place of supply of services by way of transportation of goods, including by mail or courier to, -
(a) a registered person shall be the location of such person;
(b) a person other than a registered person, shall be the location at which such goods are handed over for their transportation:
Provided that where the transportation of goods is to a place outside India, the place of supply shall be the place of destination of such goods.
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In order to provide a level playing field to the domestic transportation companies and promote export of goods, this proviso provides that transportation of goods from a place in India to a place outside India by a transporter located in India would not be chargeable to GST, as place of supply will be outside India.
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Section 13(3) - Place of supply of performance-based services
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13 (3) The place of supply of the following services shall be the location where the services are actually performed, namely: -
(a) services supplied in respect of goods which are required to be made physically available by the recipient of services to the supplier of services, or to a person acting on behalf of the supplier of services in order to provide the services:
Provided that when such services are provided from a remote location by way of electronic means, the place of supply shall be the location where goods are situated at the time of supply of services:
Provided further that nothing contained in this clause shall apply in the case of services supplied in respect of goods which are temporarily imported into India for repairs and are exported after repairs without being put to any other use in India, than that which is required for such repairs;
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13 (3) The place of supply of the following services shall be the location where the services are actually performed, namely: -
(a) services supplied in respect of goods which are required to be made physically available by the recipient of services to the supplier of services, or to a person acting on behalf of the supplier of services in order to provide the services:
Provided that when such services are provided from a remote location by way of electronic means, the place of supply shall be the location where goods are situated at the time of supply of services:
Provided further that nothing contained in this clause shall apply in the case of services supplied in respect of goods which are temporarily imported into India for repairs or for any other treatment or process and are exported after such repairs or treatment or process without being put to any other use in India, other than that which is required for such repairs or treatment or process.
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Amendment is made to not tax job work of any treatment or process done on goods temporarily imported into India (e.g., gold, diamonds) which are then exported. This is a taxpayer-friendly amendment which would encourage skill development in our country.
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Section 17 (2A) - Apportionment of tax and settlement of funds
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(2A). The amount not apportioned under sub-section (1) and sub-section (2) may, for the time being, on the recommendations of the Council, be apportioned at the rate of fifty per cent. to the Central Government and fifty per cent. to the State Governments or the Union territories, as the case may be, on ad hoc basis and shall be adjusted against the amount apportioned under the said sub-sections.
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This amendment provides that the amount of IGST which does not get apportioned under clauses (a) to (f) for the time being shall be apportioned to the Central Government and State Government/Union Territories @ 50% each on the recommendations of the Council and shall be adjusted against the amounts apportioned under clauses (a) to (f).
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New proviso in Section 20 - Application of provisions of the CGST Act
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Provided also that where the appeal is to be filed before the Appellate Authority or the Appellate Tribunal, the maximum amount payable shall be fifty crore rupees and one hundred crore rupees respectively.
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This amendment prescribes the maximum ceiling of INR 50 crores/ 100 crores as pre-deposit for filing appeal to Appellate Authority/ Appellate Tribunal respectively.
The amendment is made in line with amendments proposed in Section 107(6) and 112(8) of the CGST Act, 2017.
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…concluded.
(Bimal Jain is Executive Director, A2Z Taxcorp LLP & Isha Bansal is Partner, A2Z Taxcorp LLP, Delhi and the views expressed are strictly personal)
See Part I, Part II , Part III
| (DISCLAIMER : The views expressed are strictly of the author and Taxindiaonline.com doesn't necessarily subscribe to the same. Taxindiaonline.com Pvt. Ltd. is not responsible or liable for any loss or damage caused to anyone due to any interpretation, error, omission in the articles being hosted on the site) |
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