Finance bill (No.2) 2024 on dated 16.08.2024 (Proposed Amendments to the GST Law: Key Changes and Additions)

Index:

1. Amendments to the Central Goods and Services Tax Act, 2017 (CGST Act):
2. Amendments to the Integrated Goods and Services Tax Act, 2017 (IGST Act):
3. Amendments to the Union Territory Goods and Services Tax Act, 2017 (UTGST Act):
4. Amendments to the Goods and Services Tax (Compensation to States) Act, 2017:

Amendments to the Central Goods and Services Tax Act, 2017 (CGST Act):

1. Section 9 Amendment: Sub-section (1) of Section 9 is amended to include the words “and un-denatured extra neutral alcohol or rectified spirit used for manufacture of alcoholic liquor, for human consumption “after” alcoholic liquor for human consumption.”
2. Section 10 Amendment: Sub-section (5) of Section 10 is amended to add the reference to “section 74A” after “section 73 or section 74.”
3. Insertion of Section 11A :A new Section 11A is inserted, allowing the Government, upon being satisfied that a prevalent practice regarding the levy or non-levy of central tax on any supply of goods or services was or is in place, to issue a notification directing that the central tax payable on such supplies, or the excess central tax collected, shall not be required to be paid.
4. Section 13 Amendment: Sub-section (3) of Section 13 is amended:
   • Clause (b) is modified to clarify that the supplier needs to issue the invoice only in cases where it is required.
   • A new clause (c) is inserted, providing that the date of issue of the invoice by the recipient shall be considered where the recipient is required to issue the invoice.
   • The first proviso is amended to include a reference to the newly inserted clause(c).
5. Section 16 Amendment:
   • A new sub-section (5) is inserted, allowing registered persons to take input tax credit (ITC) for invoices or debit notes pertaining to Financial Years 2017-18 to 2020-21in any return filed by November 30, 2021.
   • A new sub-section (6) is inserted, specifying that if a registration is cancelled and later revoked, the person shall be entitled to ITC for relevant invoices or debit notes in a return filed within specific timelines after the revocation order.
6. Section 17 Amendment: Sub-section (5), clause (i) is amended to restrict the applicability of Section 74 for the period up to the Financial Year 2023-24, excluding references to Sections 129 and 130.
7. Section 21: Amendment to include reference to the newly introduced Section 74A, in addition to Sections 73 and 74.
8. Section 30: Introduces a new proviso in subsection (2) which states that revocation of cancellation of registration shall be subject to conditions and restrictions as may be prescribed.
9. Section 31:
   • Amendment to sub section (3)(f) to mandate that the period within which the tax must be paid shall be prescribed.
   • Insertion of an explanation under clause (g) to clarify that a “supplier who is not registered” includes those registered solely for tax deduction under Section 51.
10. Section 35: Amendment to include reference to Section 74A along with Sections 73 and 74 in sub section (6).
11. Section 39: Substitution of subsection (3) to require registered persons who deduct tax at source under Section 51 to file monthly returns in a prescribed form and manner, regardless of whether any deductions have been made during that month.
12. Section 49: Amendment to include reference to Section 74A in subsection (8)(c).
13. Section 50: Amendment to include reference to Section 74A in the proviso of subsection (1).
14. Section 51: Amendment to include reference to Section 74A in subsection (7).
15. Section 54: Removal of the second proviso in subsection (3).
    • Insertion of a new subsection (15) disallowing refunds of unutilized input tax credit or integrated tax paid on zero-rated supplies of goods if those goods are subject to export duty.
16. Section 61: Amendment to include reference to Section 74A in subsection (3).
17. Section 62: Amendment to include reference to Section 74A in subsection (1).
18. Section 63: Amendment to include reference to Section 74A.
19. Section 64: Amendment to include reference to Section 74A in subsection (2).
20. Section 65: Amendment to include reference to Section 74A in subsection (7).
21. Section 66: Amendment to include reference to Section 74A in subsection (6).
22. Section 70: Insertion of a new subsection (1A) mandating that all persons summoned must attend as directed and truthfully provide statements or documents during examination.
23. Section 73: Amendment to marginal heading to specify that the determination of tax applies to periods up to FY 2023-24.
    • Insertion of a new subsection (12) to confirm that the provisions of this section apply only to tax determination up to FY 2023-24.
24. Section 74: Amendment to marginal heading to specify that the determination of tax applies to periods up to FY 2023-24.
    • Insertion of a new subsection (12) to confirm that the provisions of this section apply only to tax determination up to FY 2023-24.
    • Omission of Explanation 2.
25. Insertion of Section 74A: Introduces provisions for tax determination, refunds, and penalties for the period starting from FY 2024-25 onwards.
    • Specifies the process and timelines for issuing notices, determining tax, and the applicable penalties.
    • Provides different penalty structures depending on whether the non-payment or short payment of tax was due to fraud or other reasons.
    • Clarifies the process for concluding proceedings and defines the term “suppression” in the context of this section.
26. Section 75: Sub-section (1): The applicability of Section 75(1) is extended to include references to sub-sections (2) and (7) of Section 74A.
    • Insertion of Sub-section (2A): A new provision is added where, if an Appellate Authority, Appellate Tribunal, or court finds that the penalty under Section 74A(5)(ii) is not sustainable due to the absence of fraud, willful misstatement, or suppression of facts, the person shall be liable to pay a penalty under Section 74A(5)(i).
    • Sub-section (10): Substituted to clarify that adjudication proceedings shall be deemed concluded if the order is not issued within the prescribed time limits in Section 73(10), Section 74(10), or Section 74A(7).
    • Sub-sections (11), (12), and (13): Expanded to include references to Section 74A in addition to Sections 73 and 74.
27. Section 104: The Explanation in sub-section (1) is amended to include references to sub- sections (2) and (7) of Section 74A.
28. Section 107:
    • Sub-section (6)(b): The term “twenty-five” is replaced with “twenty.”
    • Sub-section (11): References to Section 74A are added in the second proviso.
29. Section 109:
    • Sub-section (1): Expanded to allow the Principal Bench to conduct examinations or adjudicate cases referred to in Section 171(2), if notified.
    • Sub-section (5): Added provisos that specify certain cases to be adjudicated only by the Principal Bench.
    • Sub-section (6): Amended to make the President’s powers subject to the provisions of sub-section (5).
30. Section 112:
    • Sub-sections (1) and (3): Amendments effective from August 1, 2024, allowing the filing of appeals or applications withinthe prescribed period or withinthree months after the date notified by the Government, whichever is later.
    • Sub-section (6): Added provisions allowing applications to be filed within three months after the expiry of the period specified in sub-section (3).
    • Sub-section (8)(b): The terms “twenty percent” and “fifty crore rupees” are replaced with “ten per cent” and “twenty crore rupees,” respectively.
31. Section 122: Sub-section (1B): The term “Any electronic commerce operator who” is substituted with “Any electronic commerce operator, who is liable to collect tax at source under section 52.”
32. Section 127: The section is amended to include references to Section 74A in addition to Sections 73 and 74.
33. Insertion of Section 128A: A new section providing for the waiver of interest and penalty under specific conditions where a person pays the full amount of tax for periods from July 1, 2017, to March 31, 2020, as specified in Section 128A(1). Conditions for the conclusion of proceedings, as well as exceptions, are also detailed.
34. Section 140: Sub-section (7): Amended retrospectively from July 1, 2017, to include invoices received prior to, on, or after the appointed day.
35. Section 171: Sub-section (2): Adds a proviso allowing the Government to specify a date from which the Authority shall not accept requests for examination regarding the reduction of tax rates or input tax credits. The section also clarifies the definition of “Authority” to include the “Appellate Tribunal.”
36. Schedule III: New paragraphs are added, specifically addressing the treatment of co- insurance premiums and reinsurance commissions in GST, clarifying the responsibilities of the lead insurer and reinsurer regarding tax payments.
37. Section 150: Provides that no refund will be made for taxes paid or input tax credits reversed under circumstances where such payments or reversals would not have been required if Section 118 had been in force at all relevant times.

Amendments to the Integrated Goods and Services Tax Act, 2017 (IGST Act):

1. Section 5(1): A new clause is hereby inserted, bringing within the ambit of goods subject to integrated tax, “un-denatured extra neutral alcohol or rectified spirit used for the manufacture of alcoholic liquor for human consumption.
2. New Section 6A: A mechanism is introduced whereby the Government may, upon being satisfied that a general practice of non-levy or short-levy of integrated tax was prevalent, exempt the payment of integrated tax (or excess tax) on certain supplies.
3. Section 16(4): This section is clarified to ensure that claims for refunds of integrated tax paid on zero-rated supplies are to be governed in accordance with the provisions of the Central Goods and Services Tax Act, 2017.
4. Section 16(5): It is stipulated that no refund of unutilized input tax credit shall be permitted on zero-rated supplies of goods if such goods are subject to export duty.
5. Section 20 (Proviso): A proviso is added to cap the maximum amount payable for each appeal to the Appellate Authority or Tribunal at ₹40 crore.

Amendments to the Union Territory Goods and Services Tax Act, 2017 (UTGST Act):

1. Section 7(1): A clause similar to that inserted in the IGST Act, includes “un-denatured extra neutral alcohol or rectified spirit used for the manufacture of alcoholic liquor for human consumption” under the goods subject to Union Territory tax.
2. New Section 8A: A provision analogous to Section 6A of the IGST Act is introduced, allowing the Government to waive the Union Territory tax (or excess tax) if it is satisfied that a general practice of non-levy or short levy of tax was prevalent.

Amendments to the Goods and Services Tax (Compensation to States) Act, 2017:

1. New Section 8A: This new section authorizes the Government to waive the cess (or excess cess) payable on certain supplies, provided it is satisfied that a general practice of non-levy or short levy of cess was prevalent.