Highlights of amendments in GST Law

[Ashwarya Agarwal]

Highlights of major amendments in GST law to be made effective from 1^st day of February, 2019.

1. The word ‘Central Board of Excise and Customs’, wherever used is substituted as ‘Central Board of Indirect Taxes and Customs’
2. Sub-clause (h) in definition of ‘Business’ (Clause 17) is amended to ensure that all activities of Race club are included. The word service is also substituted to remove ambiguity as actionable claims have been defined as ‘goods’ in the CGST Act.  
3. Now an assessee can have separate registration for multiple place of business within a single state. The concept of Business Vertical is done away with.

For this purpose definition of ‘Business Vertical’ in Section 2 clause (18) is omitted, Proviso to section 25(2) is substituted and Rule 11 of CGST Rule is amended. Rule 41A is inserted to prescribe manner and Form ITC 02A for distribution of unutilized Input Tax Credit to newly registered Place of Business.

4. Explanation inserted in Definition of ‘Service’ in clause 102, to include facilitating or arranging transactions in securities for which service charges or service fee etc is charged;
5. Section 7 (Supply) is amended to omit clause (d) in section 7(1) and a new sub-section (1A) is inserted. Now, first an activity has to be ‘supply’ as per sub-section (1) only then it will be tested as per Schedule II. The recent AAR whereby supply of canteen services by employer to employee is a supply and hence taxable as per Schedule II, clause No 6 (b), will be tested now.
6. RCM on Un-registered Expense

Section 9(4) is substituted and as per new provision Government will notify classes of registered persons to pay the tax on reverse charge basis in respect of receipt of supplies of certain specified categories

Hence RCM on un-registered expense is not applicable till specified class of taxable person and specified goods or services is notified under section 9(4). Similar amendment is done in section 5(4) of IGST Act.

7. Composition Scheme

Section 10 is amended to increase the limit from Rupees One Crore to Rupees One Crore and Fifty Lakh. Further necessary amendment is done to allow Composition dealers to supply services

8. Explanation in clause (b) of section 16(2) is substituted to introduce concept of deemed receipt of Goods and Service for eligibility to claim Input Tax Credit. Presently this concept was only for goods.

Now, in case of services, the registered person shall be deemed to have received the services where the services are delivered by the supplier to recipient or any other person on the direction of the said registered person. This may benefit Works contractors who are providing services elsewhere and billing elsewhere.

9. Section 17(5) is amended to restrict eligibility of ITC on in respect of Motor Vehicle. Further ITC is being allowed in respect of food and beverages or both where the provision of such goods or services or both is obligatory for an employer to provide to its employees under any law for the time being in force.
10. Proviso is inserted in section 22 to enhance the maximum exemption limit for registration in the special category States from ten lakh rupees to twenty lakh rupees;
11. Clause (x) of section 24 provides for mandatory registration every e-commerce operator. This clause is now amended to provide mandatory registration for e-commerce operator who is required to collect tax at source under section 52;
12. Proviso is inserted in section 25(1) to specifically provide that an Special Economic Zone (SEZ) unit shall have to apply for a separate registration, as distinct from his place of business located outside the SEZ in the same State or Union territory;
13. Cancellation or Suspension of Registration

Section 29 is amended along with insertion of new rule 21A to introduce concept of Suspension of Registration. After this amendment, a registered person who has applied for cancellation of registration, his registration shall be deemed to be suspended from the date of submission of application of cancellation, till the proceeding for cancellation of registration is pending.

The registered person shall not make any taxable supply during the period of suspension and shall not be required to furnish any return under section 39.

14. Credit Note / Debit Note

Now a registered person can issue Single Credit Note / Single Debit Note for multiple invoices. This amendment will provide huge relief across industries as presently separate credit note / debit note was required to be issued for every single invoice. Section 34 is amended for this purpose along with insertion of sub-rule (1A) to Rule 53. Necessary changes shall be made in GST portal also for this purpose.

15. Proviso is inserted to section 35(5) to exempt department of the Central or State Government / local authority which is subject to audit by CAG, from getting their books of account audited under section 44(2) i.e. GST Audit;
16. New Section 49A & 49B is inserted to rationalize the order of set-off for ITC in different heads. Section 49 further empowers to rationalize inter utilization of ITC.
17. Definition of ‘’Export of Services’ in Clause (6) of section 2 of IGST Act is amended allow receipt of payment in INR wherever permitted by RBI. In this line, Section 54 is also amended to provide that in case of Service Exports, even if payment is received in INR as allowed by RBI, would be treated as exports and refunds would also be available against the same.
18. Maximum amount for pre-deposit to be made before filing of Appeal before the 1^st Appellate Authority under section 107 is capped at Rupees Twenty Five Crores. Similarly, in case where appeal is filed before the Appellate Tribunal under section 112, the pre-deposit amount is capped at Rupees Fifty Crores. The maximum capping amount is only for CGST;
19. The maximum period for detention or seizure of goods and conveyance in transit under section 129 is increased from 7 days to 14 days. Thereafter the proceeding shall be initiated in accordance with provisions of section 130;
20. Job Work

Proviso is inserted in section 143(1) to empower Commissioner to extend the period of one year and three year as provided in section by further period not exceeding one year and two years respectively;

21. Para 4 of Schedule I is amended to increase its scope. Now import of services by entities which are not registered under GST (say, they are only making exempted supplies) but are otherwise engaged in business activities, shall be taxed when received from a related person or from any of their establishments outside India. This will affect the foreign Companies not registered in India;
22. New entries are made in Schedule III which are as below:

Para 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.

Para 8

1. Supply of warehoused goods to any person before clearance for home consumption;

1. 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.

Now the above transactions shall also be excluded from the scope of Supply.

Discussions to this article

[Ganeshan Kalyani]

Sir, regarding point no. 9, wherein you have opined that input tax credit is being allowed in respect of food and beverages or both where the provision of such goods or services or both is obligatory for an employer to provide to its employees under any law for the time being in force. The proviso "Provided that the input tax credit in respect of such goods or services or both shall be available, where it is obligatory for an employer to provide the same to its employees under any law for the time being in force.”." is given after clause (ii) & (iii) which shall mean that the proviso is applicable to clause (ii) & (iii), but these clauses does not have "food and beverage". Whether the interpretation in the article will hold good.

[Ashwarya Agarwal]

KA: Mr. Ganeshan Kalyani

Thank you for sharing your views.

I my view, the proviso should be read for entire clause (b). The commentary on amendment issued by CBIC has also given similar view.

Infact in earlier provision also, it allowed ITC of rent-a-cab, lie insurance & health insurance service where it is obligatory in law.

I hope you agree.