The Union Budget has become a dull affair as far as the Goods & Services Tax (GST) Acts go. Article 279 A of the Constitution empowers the Goods & Services Tax (GST) Council to act on and make all recommendations relating to GST. This covers the whole ambit of issues relating to GST including the laws -- Central Goods & Services Tax Act (CGST) and Integrated Goods & Services Tax Act (IGST).
The recommendations relating to laws are given effect to by the Finance Bill since they involve the statute. The latest Budget gave legal sanctity to the recommendations made by the GST Council in the meetings held over the course of the year. The year 2022 saw only two GST Council meetings -the 47th held in June and the 48th held in December. Hopefully 2023 will see greater engagement between the Centre and the States.
The Finance Bill has fifteen clauses (128 to 142) relating the CGST and two clauses (143 and 144) relating to IGST. The proposals are a mix of measures which can broadly be categorised under different heads.
Facilitation & Ease of Doing Business
-Clause 128 seeks to amend section 10 of the CGST Act to permit unregistered and composite persons to make intra-state supplies thorough e-commerce operators. This should give a much-needed boost to the MSME sector.
-Clause 131 is a proposal to be applied retrospectively from 1st July 2017 and seeks to address a contradiction in the CGST Act between sections 22 and 24. One section states that registration is necessary in case supplies are made in situations where GST is being paid under the reverse charge mechanism and the other, states that registration is not required in case the supplier is exclusively dealing in non-taxable or exempted goods. This amendment is welcome.
-Clause 136 seeks to rectify a superfluous phrase in section 54 and align it with section 41. The law as it stands prescribes that refund will be given only after excluding the provisional credit already taken; this will continue to happen but the reference to provisional credit is being deleted. The logic being in a self-assessment regime this is the right of the assessee and in any case the refund will be minus the credit taken.
-The next clause 139 proposes to increase the threshold limit for launching prosecution to Rs.2 crore and decriminalizes a whole host of offences except offences relating to fake invoices.
-Clause 142 is a retrospective amendment proposed in Schedule III of the CGST Act which lists the activities to be treated as neither a supply of goods or services. Specifically, clearance of goods from a customs bonded warehouse or high sea sales or supply from a non-taxable territory to another non-taxable territory were given such benefit from 2019. There was ambiguity for the earlier period -from July 2017.The benefit now will be available retrospectively with the caveat that those who had earlier will not get refund.
Tightening possible leakages
- Clause 129 enjoins the recipient to reverse credit with interest in the event of the recipient not paying the supplier within 180 days of the receipt of the goods.
-Clause 138 seeks to introduce a new provision in section 122 dealing with offences and penalties. The onus is being cast on e-commerce operators to ensure that unregistered suppliers doing intra-state supply of goods follow all the rules- failure would result in the e-commerce operator being penalized.
-Clause 140 dealing seeks to debar persons involved in fake invoices from the facility of compounding of offences with suitable changes in Sec 138.
-Clause 143 seeks to amend definitions of ‘non-taxable online recipient’ and ‘Online information Data Retrieval Services’; the proposed amendments will expand the scope of the levy.
Rectifying/clarifying legal position
- The Bill proposes that no credit will be available in case of goods or services received which are used/intended to be used for discharge of statutory corporate social responsibilities. This was an issue which was hanging fire for some time with divergent interpretations. Perhaps the clarification is a little harsh but nevertheless should ensure that there is no confusion of the intent.
-Clauses 131,132,133 and 134 prescribe a time limit of 3 years for filing returns from the due date of filing returns in the case of GSTR’s 1, 3B ,9 and 8.
-Clause 137 prescribes the methodology for calculating the interest in case the department delays refund beyond 60 days
-Clause 141 proposes to introduce a new section-sec 158A which empowers the government to place all information submitted in the returns in a common portal -obviously this would imply that this can be shared with other agencies.
-The last clause 144 seeks to omit the proviso to sub-section (8) of section 12 -this was a proviso relating to supply of services by mail or courier which previously stated that the destination will be the place of supply .
All the provisions are to be implemented prospectively except for the two provisions which specifically mention otherwise.
To conclude one can, do no better than a quote from the Statement of Fiscal Policy-- ‘GST with a motto of "One Nation One market, One Tax" has emerged as a transparent, neutral, efficient tax regime. Government is further leveraging GST to augment receipts. The progressively higher GST collections are indicative of a maturing GST regime. GST receipts are estimated at `9.57 lakh crore in BE 2023-24, registering a growth of 12.0 percent over Revised Estimates.’
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