The objective behind Central Goods and Service Tax, 2017 was to make a provision for levy and collection of tax on intra-State supply of goods or services or both by the Central Government. It provides elaborate transitional provisions for a smooth transition of existing taxpayers to goods and services tax regime and a way to recover arrears of tax, using various modes including detaining and sale of goods, movable and immovable property of defaulting taxable person.
However, the tax came with its share of downsides. One of the primary difficulties faced by taxpayers, especially by the small business was the process of filing return, and payment of tax as everything from registration to return filing and payment is now online, and they were used to the paperwork.
For this government, the Act was proposed to be amended to facilitate the process. The Central Goods and Services Tax (Amendment) Bill, 2018 was subsequently introduced by Mr. Piyush Goyal, Minister of Finance, Government of India, in the Lok Sabha on August 7, 2018. The Bill incorporated some changes to the 2017 Central Goods and Services Tax Act.
ANALYSIS OF THE AMENDMENT
1. Definitions: Section 2 of the Central Goods and Services Tax (Amendment) Act, 2018 makes changes in Section 2 of the Central Goods and Services Tax Act, 2017 (principal Act) which deals with definitions. Amendments in this section are as follows-
- Central Board of Indirect Taxes and Customs (CBIC) has replaced the Central Board of Excise & Customs (CBEC).
- Section 2(18) CGST Act 2017 that defines business vertical had been omitted in its absoluteness.
- The amendment brings the activities of a race club including by way of totalisator or a license to bookmaker or activities of a licensed bookmaker in such club within the scope of business in section 2 (17) (h).
- By way of explanation, the Amendment Act also clarified that the expression "services" includes facilitating or arranging transactions in securities.
- Composition Scheme: Section 5 of the Central Goods and Services Tax (Amendment) Act, 2018 amended section 10 of the Principal Act by raising the statutory threshold of the turnover for a taxpayer eligible for composition scheme from ₹ one crore to ₹ 1.5 crores, and allow composition scheme taxpayer to supply services (other than restaurant services), for value not exceeding 10% of turnover in preceding Financial Year or ₹ five lakhs, whichever is higher.
- The scope of supply: Section 3 of the Central Goods and Services Tax (Amendment) Act, 2018 proposed to introduce a new subsection in section 7 of the principal Act to avoid any inconsistency. Clause 3 (b) of the amendment Act inserted section 7(1A) namely- where certain activities or transactions constitute a supply in accordance with the provisions of sub-section (1), they shall be treated either as a supply of goods or supply of services as referred to in Schedule II.
- Reverse Charge: Section 4 of the Central Goods and Services Tax (Amendment) Act, 2018 substituted Section 9 sub-section (4) by the following sub-section namely- On the advice of the Council, the government may by notification, specify the class of registered persons who for the supply of specified categories of goods or services or both obtained from a non-registered supplier, pay the reverse charge tax as the recipient of such supplies of goods or services, or both, and all the provisions of this Act shall apply to the recipient of such supplies of goods or services or both.
- GST Registration: A) According to Section 12 of the Central Goods and Services Tax (Amendment) Act, 2018 Compulsory registration should be applied to only those e-commerce operators who are required to collect Tax at Source (TCS).
B) Section 13 of the Central Goods and Services Tax (Amendment) Act, 2018 inserted the following provision in Section 25 of the principal Act namely- "Provided further that a person is having a unit, as defined in the Special 28 of 2005. Economic Zones Act, 2005, in a Special Economic Zone or being a Special Economic Zone developer shall have to apply for a separate registration, as distinct from his place of business located outside the Special Economic Zone in the same State or Union territory." And replaces subsection 2 by following Provided that a person having multiple places of business in a State or Union territory may be granted a separate registration for each such place of business, subject to such conditions as may be prescribed.
This amendment has allowed registration of a person having multiple places of business in a State or Union territory to be taken based on place of business. Multiple registrations within the same state allowed for each place of business. However, where multiple registrations will be taken within the same state, each such registration shall be considered as a distinct person and taxability will be applicable accordingly.
- Scope for Input Tax Credit (ITC) eligibility: Section 9 of the Central Goods and Services Tax (Amendment) Act, 2018 Input Tax Credit was made applicable to motor vehicles and other modes of conveyances only if they were being used for a specific objective, including goods transportation.
The amendment Act makes it clear that motor vehicles only includes the motor vehicles with a seating capacity of not more than thirteen persons (including the driver).
Goods or services which are obligatory for an employer to provide to its employees under any law.
ITC on food and beverages, outdoor catering, beauty treatment, etc. would be allowed only to those who provide the same line of activities and if obligatory to an employee under any law.
- Cancellation of registration: Section 14 of the Central Goods and Services Tax (Amendment) Act, 2018 inserted the words “or suspension’ in Section 29 of the principal Act. Whereby during the ongoing process of cancellation of registration, there would be a temporary suspension of registration.
The Central Goods and Services Tax (Amendment) Act, 2018 has been modelled with utmost responsibility and care for the interest of both the seller as well as the consumer and to simplify the tax procedure & minimize evasions Thus; it will remove the confusion and complications too. The concept of GST is continuously being regulated to make it more business-friendly. This amendment is another step towards that goal.