Proposal for ‘unique identification marking’ ( in short UIM) - for digitization of track and trace mechanisms to improve transparency and check tax evasion and also for penalty on contravention.

[DEVKUMAR KOTHARI]

Proposal for ‘unique identification marking’ ( in short UIM)  - for digitization  of  track and trace mechanisms to improve transparency and check tax evasion and also for penalty on contravention.

Proposed new provisions in  the Finance Bill, 2025 relating to UIM are discussed and anlaysed below with highlights added and observations and discussions:

Relating to Central Goods and Services Tax

 As and when  these provisions will be implemented under CGST Act, the same will also be implemented under other GST laws.

The implementation shall require recommendation of the GST Council , then issue of notification for prescribed goods and person, making of Rules etc.

Amendment of section 2.

116. In the Central Goods and Services Tax Act, 2017 (12 of 2017.) (hereinafter referred as the Central Goods and Services Tax Act), in section 2,––

(iii) after clause (116), the following clause shall be inserted, namely:––

‘(116A) “unique identification marking” means the unique identification marking referred to in clause (b) of sub-section (2) of section 148A and includes a digital stamp, digital mark or any other similar marking, which is unique, secure and non-removable;’;

Notes:

It is also proposed to insert a new clause (116A) in section 2 so as to define the expression “unique identification marking” to mean a mark that is unique, secure and non-removable, for implementation of track and trace mechanism.

Observations:

The UIM shall be unique, secure , will not be removable. It can be in form of digital stamp, digital mark or any other similar marking- means scope is wider and with innovations and requirement many more type can be added.

Insertion of new section 148A.

127. After section 148 of the Central Goods and Services Act, the following section shall be inserted, namely:––

Track and trace mechanism for certain goods.

“148A. (1) The Government may, on the recommendations of the Council, by notification, specify,–

(a) the goods;

(b) persons or class of persons who are in possession or deal with such goods,

to which the provisions of this section shall apply.

(2) The Government may, in respect of the goods referred to in clause (a) of sub-section (1),––

(a) provide a system for enabling affixation of unique identification marking and for electronic storage and access of information contained therein, through such persons, as may be prescribed; and

(b) prescribe the unique identification marking for such goods, including the information to be recorded therein.

(3) The persons referred to in sub-section (1), shall,––

(a) affix on the said goods or packages thereof, a unique identification marking, containing such information and in such manner;

(b) furnish such information and details within such time and maintain such records or documents, in such form and manner;

(c) furnish details of the machinery installed in the place of business of manufacture of such goods, including the identification, capacity, duration of operation and such other details or information, within such time and in such form and manner;

(d) pay such amount in relation to the system referred to in sub-section (2), as may be prescribed.”.

Notes on clause: 

Clause 127 of the Bill seeks to insert a new section 148A in the Central Goods and Services Tax Act so as to provide for an enabling provision for implementation of track and trace mechanism for ensuring effective monitoring and control of supply of specified commodities.

Observations:

This is enabling provision and accordingly it is expected that Rules or guidelines shall be framed and notified for implementation in due course.

Insertion of new section 122B.

126. After section 122A of the Central Goods and Services Act, the following section shall be inserted, namely:―

Penalty for failure to comply with track and trace mechanism.

“122B. Notwithstanding anything contained in this Act, where any person referred to in clause (b) of sub-section (1) of section 148A acts in contravention of the provisions of the said section, he shall, in addition to any penalty under Chapter XV or the provisions of this Chapter, be liable to pay a penalty equal to an amount of one lakh rupees or ten per cent. of the tax payable on such goods, whichever is higher.”.

Notes on  Clause 126 

Clause 126  of the Bill seeks to insert a new section 122B in the Central Goods and Services Tax Act to provide for penal provisions for contraventions of the provision relating to track and trace mechanism.

Observations:

The new penalty proposed shall be mandatory and in addition to other penalties, as may be applicable according to facts and circumstances of the case and other violations.

Identification marks found in markets:

We find use of identification marks on products and packets. These include bar codes, uniform product code etc. These are used to identify and track products in the store, These codes have system of scanning that enable information reading, using and writing to complete many documents like cash memo/ bill/ invoice, stock movement document,  stock register and related reports for keeping updated stock and other records at warehouse and stores.

In logistics also bar codes are provided on packages booked in post and parcel division of Indian Post for speed post, registered letters, and by couriers and shipping companies. Clear and effective bar code is important for accurate reading and transmission of information for various tracking and recording purposes.

Barcodes were invented during 1950s and got wide use in 1970s.

We can find barcodes on many  kinds of goods, documents, identification wristbands, airline luggage, tickets,  shipping documents, transportation documents.

UIM is also expected to be on similar lines and based on similar or advanced technology with more stringent norms to ensure accuracy, speed, and dependability of reports to be generated, transmitted  UIM and related systems.