SECTIONWISE ANALYSIS – GST AMENDMENTS

GST AMENDMENTS – HIGHLIGHTS AT A GLANCE

1. Union Territory to include ‘Ladakh’ & ‘Dadra and Nagar Haveli and Daman and Diu’

Source
Clause 116 of the Finance Bill,2020.
Clause 135 of the Finance Bill, 2020
Effective Date
Date to be notified by the government.
Affected Provision
Section 2(114) of the CGST Act, 2017.
Section 2(8) of the UTGST Act, 2017

Provision before amendment

CGST ACT (114) “Union territory” means the territory of—
(a) the Andaman and Nicobar Islands;
(b) Lakshadweep;
(c) Dadra and Nagar Haveli;
(d) Daman and Diu;
(e) Chandigarh; and
(f) other territories.
Explanation. ––For the purposes of this Act, each of the territories specified in sub-clauses (a) to (f) shall be considered to be a separate Union territory.

Provision after Amendment

CGST ACT (114) “Union territory” means the territory of—
(a) the Andaman and Nicobar Islands;
(b) Lakshadweep;
(c) Dadra and Nagar Haveli and Daman and Diu;
(d) Ladakh;”.
(e) Chandigarh; and
(f) other territories.
Explanation. ––For the purposes of this Act, each of the territories specified in sub-clauses (a) to (f) shall be considered to be a separate Union territory

Effect of the Amendment

The definition of Union Territory now recognizes ‘Ladakh’ as a separate Union Territory in the CGST Act 2017.
‘Dadra and Nagar Haveli and Daman and Diu’ have been combined in the definition of Union Territory as they are now considered as part of the same Union Territory.

2. Composition Scheme to restrict the certain supply of services

Source
Clause 117 of the Finance Bill,2020.
Effective Date
Date to be notified by the government.
Affected Provision
Section 10(2) (b) (c) & (d) of the CGST Act, 2017.

Amendment

The provision marked in green has been inserted:
(2) The registered person shall be eligible to opt under sub-section (1), if: —
(a) he is not engaged in the supply of services other than supplies referred to in clause (b) of paragraph 6 of Schedule II;
(b) he is not engaged in making any supply of goods or services which are not leviable to tax under this Act;
(c) he is not engaged in making any inter-State outward supplies of goods or services;
(d) he is not engaged in making any supply of goods or services through an electronic commerce operator who is required to collect tax at source under section 52; and
(e) he is not a manufacturer of such goods as may be notified by the Government on the recommendations of the Council:
Provided that where more than one registered persons are having the same Permanent Account Number (issued under the Income-tax Act, 1961), the registered person shall not be eligible to opt for the scheme under sub-section (1) unless all such registered persons opt to pay tax under that sub-section.

Effect of the Amendment

In the composition scheme, the following group of persons will also be excluded from opting for the said scheme:
a) Persons engaged in making inter-state outward supply of services
b) Persons engaged in making any supply of services which are not leviable to tax
c) Persons engaged in making a supply of services through electronic commerce operator required to collect TCS
Though the above category of persons was excluded in respect of the ‘supply of goods’, exclusion for ‘supply of services’ has now been provided.

3. Last date for availment of ITC for debit notes

Source
Clause 118 of the Finance Bill, 2020.
Effective Date
Date to be notified by the government.
Affected Provision
Section 16(4) of the CGST Act, 2017

Amendment

The provision marked in red has been omitted
16 (4). “A registered person shall not be entitled to take input tax credit in respect of any invoice or debit note for supply of goods or services or both after the due date of furnishing of the return under section 39 for the month of September following the end of financial year to which such invoice or invoice relating to such debit note pertains or furnishing of the relevant annual return, whichever is earlier.

Effect of the Amendment

This provision is a relief for the time limit allowed for the availment of the input tax credit on debit notes. The time limit of the due date of September return of the next financial year for availment of the input tax credit on debit notes will be taken as per the date of the issuance of the debit note and not the date of the invoice to which such debit note is linked.
Let us take an example. An invoice is issued for Rs. 1,00,000 plus 18% GST on 1st March 2019. The debit note against such an invoice is issued for Rs. 10,000 plus 18% GST on 1st August 2019. Before this amendment, the due date for availment of such credit was the due date of September return of subsequent financial year to which the invoice related i.e. 20th October 2019. If the said debit note is itself issued after the said date (say 1st November 2019), the time limit of availment of such credit would have already expired.
To correct this anomaly, the last date of taking the input tax credit now will be the due date of the September return of the subsequent financial year to which the debit note pertains. In the above example, the time limit for availing such credit for which the debit note is issued during the year 2019-20 will be 20th October 2020.

4. Voluntary registration allowed to be cancelled

Source
Clause 119 of the Finance Bill, 2020.
Effective Date
Date to be notified by the government.
Affected Provision
Section 29(1)(c) of the CGST Act, 2017

Provision before amendment

29(1)(c) the taxable person, other than the person registered under sub-section (3) of section 25, is no longer liable to be registered under section 22 or section 24.

Provision after amendment

29(1)(c) the taxable person is no longer liable to be registered under section 22 or section 24 or intends to opt-out of the registration voluntarily made under sub-section (3) of section 25:”

Effect of the Amendment

The provisions of cancellation of registration have now been modified to allow those cases wherein a person had obtained their registration voluntarily.

5. Extension of the application period for ‘revocation of cancellation of registration’

Source
Clause 120 of the Finance Bill, 2020.
Effective Date
Date to be notified by the government.
New Section
Section 30(1) of the CGST Act, 2017

Provision before amendment

Provided that the registered person who was served notice under sub-section (2) of section 29 in the manner as provided in clause (c) or clause (d) of sub-section (1) of section 169 and who could not reply to the said notice, thereby resulting in cancellation of his registration certificate and is hence unable to file application for revocation of cancellation of registration under sub-section (1) of section 30 of the Act, against such order passed up to 31-3-2019, shall be allowed to file application for revocation of cancellation of the registration not later than 22-7-2019.

Provision after amendment

“Provided that such period may, on sufficient cause being shown, and for reasons to be recorded in writing, be extended––
(a) by the Additional Commissioner or the Joint Commissioner, as the case may be, for a period not exceeding thirty days;
(b) by the Commissioner, for a further period not exceeding thirty days, beyond the period specified in clause (a).”.

Effect of the Amendment

Currently, a person is allowed to revoke their cancellation of registration by making an application within 30 days from the date of service of the cancellation order.
After this amendment, upon ‘sufficient cause being shown’ and ‘for reasons recorded in writing’, the time period can be extended as follows:
a) Up to 30 days – by Additional Commissioner or Joint Commissioner
b) A further period of 30 days after (a) above – by Commissioner.

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