UNION BUDGET 2020- IMPORTANT AMENDMENTS INTRODUCED IN GST ACT

Amendment in penalty provisions:

Section 122 of the CGST Act has been amended to comprise that the person involved/benefited out of fake ITC (Input Tax Credit) shall also be liable for a penalty of 100% of the tax involved. The penalty will be levied on that person who retains the benefit of a fraudulent supply of goods and/or services and on a person at whose instance such fraudulent transactions are executed.

However, it would be expedient for the enforcement authorities to ensure that bonafide person or recipients do not have to pass through the harshness of such severe provisions.

Section 132 of the CGST Act has been amended to make the offence of a fraudster availing ITC (Input Tax Credit) without any invoice or bill as cognizable and non-bailable. The law is amended to extend the imprisonment to those ‘who causes to commit’ and ‘person retaining the benefit’. Before introducing the amendment, the punishment was restricted only to the person who committed the fraud.

Date for ITC on Debit Note:The date of the debit note will be considered for availing ITC (Input Tax Credit).  This will benefit a lot, now, ITC in respect of a debit note issued in, for example, Financial year 2020-21 for an invoice of Financial year 2019-20 can now be claimed by the recipient on or before the due date of September 2021 return or the annual return of Financial Year 2020-21, whichever is earlier.

Composition scheme to service providers:

Composition scheme cannot be availed by taxpayers supplying services outside the state, making exempt supplies, or making supplies through e-commerce operators who are liable for Tax Collected at Source (TCS).

Miscellaneous:

Refunds due to inverted tax prevalent for tobacco products is barred with a retrospective effect from 1 July 2017. the retrospective effect has been given for transition provisions from 1 July 2017.  

A new provision has been included to provide for the cancellation of voluntary GST registration of distinct people.

The power to condone the delay in applying for revocation of cancellation has been given to Additional Commissioners and Commissioners for 30 days.

The supply of fishmeal provided a retrospective GST exemption from 1 July 2017 to 30 September 2019.

It further seeks to retrospectively levy central tax at the reduced rate of six per cent. on supply of pulley, wheels and other parts (falling under heading 8483) and used as parts of agricultural machinery of headings 8432, 8433 and 8436, during the period from the 1st day of July, 2017 up to 31st day of December, 2018 (both days inclusive).  It also seeks to provide that no refund shall be made of the tax which has already been collected.

CBIC extended the time limit to issue the removal of difficulty order from earlier three-year limit to now five years w.e.f 1 July 2017. Also, the board’s approval is not required for the order to determine the expense in special audit and extension of the time limit to return the inputs and capital goods from job worker.

Aligned the definition of “Union territory” in line with the Jammu and Kashmir Reorganization Act, 2019 and the Dadra and Nagar Haveli and Daman and Diu (Merger of Union Territories), Act, 2019. Thus, new union territory, Ladakh has been included in the definition of Union Territory. Jammu & Kashmir will have its appellate tribunal.

Source: Finance Bill 2020

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