MEMO - MEMORANDUM REGARDING DELEGATED LEGISLATION - Taxation Laws (Amendment) Bill, 2017

MEMORANDUM REGARDING DELEGATED LEGISLATION Clause 3 of the Bill seeks to insert new sections 108A and 108B in the Customs Act, 1962. Sub-section (1) of proposed section 108A empowers the Central Government to make rules to provide for the information to be furnished by persons specified therein in respect of import or export of goods and the manner of furnishing such information. 2. The matters in respect of which rules or regulations may be made or notifications may be issued in accordance with the provisions of the Bill are matters of procedure and detail and it is not practicable to provide for them in the Bill. 3. The delegation of legislative power is, therefore, of a normal character. FINANCIAL MEMORANDUM The Bill proposes to make certain amendments in the Customs Act, 1962, the Customs Tariff Act, 1975, the Central Excise Act, 1944, the Finance Act, 2001, the Finance Act, 2005 and to repeal certain enactments which are consequential to the enactments proposed to be enacted for the introduction of goods and services tax. It does not involve any financial implication. STATEMENT OF OBJECTS AND REASONS As the goods and services tax is to be introduced with effect from the 1st day of July, 2017, the following four legislations are in the process of being enacted, namely:- (a) the Central Goods and Services Tax Bill, 2017; (b) the Integrated Goods and Services Tax Bill, 2017; (c) the Union Territory Goods and Services Tax Bill, 2017; (d) the Goods and Services Tax (Compensation to the States) Bill, 2017. 2. Consequently, the central excise duty on excisable goods [other than Petroleum Crude, Motor Spirit (Petrol), High Speed Diesel, Aviation Turbine Fuel and Natural Gas], the service tax on taxable services, the value added tax on sale or purchase of goods and certain other taxes shall be subsumed in the goods and services tax. Therefore, it requires certain consequential amendments in the Customs Act, 1962, the Customs Tariff Act, 1975, the Central Excise Act, 1944, the Finance Act, 2001 and the Finance Act, 2005 and repeal of certain enactments. 3. The Customs Act, 1962 provides for removal of goods from a customs station to a warehouse without payment of duty. It is proposed to amend the said Act to include 'warehouse' in the definition of customs area to ensure that an importer would not be required to pay the proposed integrated goods and services tax at the time of removal of goods from a customs station to a warehouse. It is also proposed to amend the said Act to insert new provisions therein so as to provide for furnishing of information by specified persons in respect of import or export of goods, on the lines of the Income-tax Act, 1961, the Central Excise Act, 1944, Chapter V of the Finance Act, 1994 and the legislations referred to in paragraph 1. 4. The Customs Tariff Act, 1975 is proposed to be amended to provide for levy of integrated goods and service tax and goods and services tax compensation cess on imported goods, including valuation thereof, so as to provide a level playing field to the domestic industry vis- -vis imported goods. 5. Consequent to the proposed repeal of the Central Excise Tariff Act, 1944 vide the Central Goods and Services Tax Bill, 2017, a new Schedule, namely, the Fourth Schedule is proposed to be inserted in the Central Excise Act, 1944 to provide for classification and duty rates for excisable goods, namely, Petroleum Crude, Motor Spirit (Petrol), High Speed Diesel, Aviation Turbine Fuel and Natural Gas, Tobacco and Tobacco products, which are presently covered under Chapter 24 and Chapter 27 of the Central Excise Tariff Act, 1985, so that the said Schedule will continue to attract central excise duty even after the commencement of the legislations referred to in paragraph 1. Certain consequential amendments are proposed to be made in the Central Excise Act, 1944 also relating to certain definitions, charging sections, provisions of deemed manufacture and insertion of emergency powers to increase the rate of duty, on the same lines as are presently provided in the Central Excise Tariff Act, 1985. 6. Consequent to the introduction of goods and services tax, the cesses or surcharges levied or collected as duties of central excise on excisable goods or as service tax on taxable services would become irrelevant, as the supplies of such goods [except Petroleum Crude, Motor Spirit (Petrol), High Speed Diesel, Aviation Turbine Fuel and Natural Gas, Tobacco and Tobacco products] and such services would be chargeable to goods and services tax. The proposed Bill seeks to abolish certain cesses or surcharges which are levied or collected as duty of excise or service tax under various Acts. The proposed Bill also seeks to abolish the cess levied on water consumed by certain industries and by local authorities under the Water (Prevention and Control of Pollution) Cess Act, 1977. 7. The Bill seeks to achieve the above objectives.