Detailed analysis of Changes in IDT in Budget

SUMMARY OF BUDGET 2019

GOODS AND SERVICES TAX ACT 2017

Amendment for Composition scheme
Section 10 of CGST Act 2017

1. An alternative composition scheme for payment of tax at 6% is provided for supplier of services or mixed suppliers (not eligible for the earlier composition scheme) having an annual turnover in preceding FY upto Rs 50 lakhs. Following are the points to be noted
   1. To avail this scheme such persons
      • Do not supply of goods or services which are leviable to tax like liquor, petrol, diesel etc.
      • Do not make any inter-State outward supplies;
      • Do not supply through an electronic commerce operator who is required to collect tax at source;
      • Is not be a manufacturer notified goods or is not a supplier of notified services and
      • Is not be a casual taxable person or a non-resident taxable person
      • Do not collect any tax from the recipient of supply and also not entitled to avail ITC.
   2. Where more than one registered person having same PAN shall opt for all registration under the same exemption
2. Casual Taxable Person and Non-Resident Taxable Person is not eligible for the composition scheme.
3. Further, explanation is being added to section 10 to clarify that:

1. For computing the aggregate turnover to determine eligibility for the composition scheme, interest or discount on deposits, loans or advances would not be taken into account; and
2. For payment of tax, the following values will not be considered –
   • interest or discount on deposits, loans and advances;
   • Value of the first supplies from 1^st of April till the date when the taxpayer becomes liable for registration shall not be taken into account.

H&A Comments:

1. Person supplying services of the value not exceeding 10% of the turnover in a state/ Union territory in the preceding FY or 10 lakh whichever is higher could opt for composition scheme. Amendment has been proposed to exclude the income in the nature of interest or discount by way of extending deposits, loans etc. for computing such service turnover.
2. Earlier, there was no specific provision in the Act for restricting casual taxable person and non-resident taxable person to opt for composition scheme. However, Rule 5 of CGST Rule provided for the same. Now the provision has been inserted in the Act itself.
3. The persons having turnover up to 50 Lakhs may opt for payment of tax at the rate of 6% notified under notification.02/2019 dated 7th March, 2019 effective from 1st April 2019 is given legal sanctity by making corresponding provision in the Act.

Higher threshold exemption for registration

Section 22(3) of CGST Act 2017

H&A Comments:

1. This was the welcome benefit provided for the small tax payers supplying only goods including interest provided through notification.10/2019 dated 7th March, 2019 effective from 1st April 2019 which has been proposed to amendment in the Act itself. The exemption also has been provided to the persons having exempt supply of services provided by way of extending deposits, loans or advances in so far as the consideration is represented by way of interest or discount.
2. Further, restriction for claiming exemption had been provided under notification stating persons required to take compulsory registration under section 24 of the said Act and persons engaged in making supplies of the specified goods. Such restriction has not been provided under the proposed amendment to act which may be prescribed under the notification issued at the later date.

Higher threshold exemption limit for registration under GST Act from Rs. 20 lakhs to such amount not exceeding Rs. 40 lakhs in case of supplier who is engaged in exclusive supply of goods and also to the persons having interest earned from extending deposits, loans or advances along with supply of goods.

Aadhaar Authentication mandatory

Section 25(6A) of CGST Act 2017

1. Aadhaar authentication has been mandatory for taxpayers and manner of authentication would be prescribed.
2. For person other than individual, Aadhaar authentication shall be undergone of the Karta, Managing Director, whole time Director, such number of partners, Members of Managing Committee of Association, Board of Trustees, authorised representative, authorised signatory and such other class of persons
3. Following are the gist of proposed provisions of the Act

1. Following are the ways provided prescribed for Aadhaar Authentication 
   • undergo authentication through Aadhaar
   • furnish proof of possession of Aadhaar number
   • if an Aadhaar number is not assigned to the registered person, such person shall be offered alternate and viable means of identification
2. In case of failure to make Aadhaar Authentication in the above prescribed ways then for the registration allocated shall be deemed to be invalid and prosecution provisions shall apply as if such person does not have registration.
3. The expression 'Aadhaar number' shall have the same meaning as assigned to it in section 2(a) of the Aadhaar (Targeted Delivery of Financial and Other Subsidies, Benefits and Services) Act, 2016
4. Government on recommendation of Council, may recommend person or class of person to whom above provision shall not apply.

H&A Comments:

Over the period of time, Aadhaar Authorisation has been mandatory to all the Act passed by the Government. It has been also proposed to be inserted in GST law for Aadhaar authentication for registration. In case the Aadhar authentication has not been made by the ways provided then

1. For registered person, registration shall be deemed to be invalid and even prosecution provisions shall be applied.
2. For new registration, registration shall not be completed.

Payment method disclosure on invoice

Section 31A of CGST Act 2017.

H&A Comments:

As the government's motive of moving towards the cashless economy, a new section 31A has been inserted. The government may specify the class of registered person who shall provide the prescribed modes of payment in the invoice which will ensure that such persons receive through electronic modes only.

A new section 31A is being inserted in the CGST Act to provide to the specified suppliers of goods and services to mandatorily give the option of specified modes of electronic payment in the invoice to their recipients.

Proposition of New Returns

Section 39 (1), (2) and (7) of CGST Act 2017

Section 39 of the CGST Act is being amended so as to allow –

The composition taxpayers to furnish annual return along with quarterly payment of taxes;

H&A Comments:

In place of current system of filing returns i.e. GSTR-1 and GSTR-3B, in order to ease of doing business and to reduce the compliance burden to the assesses, government proposed to bring only one return per month/quarter along with annual return. The proposed returns will be rolled out from Oct 2019 phase wise and from Jan 2020 will be implemented fully for the all the tax payers

Other specified taxpayers may be given the option for furnishing quarterly returns or monthly returns and payment of taxes under the proposed new return system.

Empowerment of power to Commissioner to extend time limit of furnishing Returns

Section 44(1), Section 52(4) & (5) and Section 168 of CGST Act 2017.

Commissioner has been empowered to extend the due date for furnishing of following forms which was previously extended by special order (Removal of Difficulty order) issued by Government

1. Annual return (FORM GSTR-9/9A)
2. Reconciliation statement (FORM GSTR-9C).
3. Monthly (GSTR 8) and annual statement (GSTR 9B to be notified) to be furnished by person collecting tax at source.

H&A Comments:

Earlier, due date of furnishing all the above-mentioned forms could be extended only through Removal of Difficulty order (special order) issued by Government in exercise of powers under Section 172. Amendment has been proposed to empower the commissioner to extend the due date by issuing notification

Commissioner or Joint Secretary shall exercise the powers specified in the said sections with the approval of the Board

Transfer of cash balance of particular head to other head

Section 49(10) & (11) & Section 53A of CGST Act 2017 and Section 17 of IGST Act 2017.

1.  Any amount of tax, interest, penalty, fee or any other amount available in the electronic cash ledger can be transferred to the electronic cash ledger for integrated tax, central tax, State tax or Union territory tax or cess in FORM GST PMT-09. The date from which such facility would be available would be notified subsequently. The Form PMT-09 has been notified.
2. Once the taxes are transferred from one account to other settlement between Centre and States shall be made.

H&A Comments:

This is a welcome facility which will enable the taxpayers to consider the cash ledger as one account whereby deposits can be made in the electronic cash ledger any head i.e. IGST, CGST, SGST, Cess or any other head, which can then be used to pay either IGST, CGST, SGST,UTGST or Cess. However, penalties and interests cannot be paid from the already existing cash balances under other heads. Such facility had been provided under notification 31/2019 dated 28th June 2019 which has been inserted in the law itself. Settlement of taxes between Center and States consequent to transfer of taxes from one account to other has also been provided in the law.

Interest delayed payment of taxes on net cash tax liability

Section 50(1) of CGST Act 2017.

H&A Comments:

Though the concept of levying interest on net liability of tax was there under the erstwhile tax regime. However, under GST interest has to be discharged on the gross liability. After various cases filed on the same now government proposed to levy interest on the net liability of cash payment after adjusting the input tax credit. This amendment has to be considered retrospective and clarity in this regard may be given in the Act itself. under other heads. Such facility had been provided under notification 31/2019 dated 28th June 2019 which has been inserted in the law itself. Settlement of taxes between Center and States consequent to transfer of taxes from one account to other has also been provided in the law.

New proviso in sub-sections (1) is being inserted in section 50 of the CGST Act so as to provide for charging interest for delayed payment of tax on only the net cash tax liability, except in those cases where returns are filed subsequent to initiation of any proceedings under section 73 or 74 of the CGST Act.

Empowerment of CG to disburse the refund of State taxes

 Section 54(8A) of CGST Act.

H&A Comments:

Earlier there was no power to the Central Government to disburse the refund amount to the tax payers in respect of refund of State taxes. However, the government has proposed to give power to the Central Government to disburse the refund amount of State taxes. This has reduced the complications of requesting state government authorities once the order has been passed by the Central Government. Complementary amendment will be made in all the state legislatures as well.

New sub-section (8A) is being inserted in section 54 of the CGST Act so as to provide that the Central Government (CG) may disburse refund amount to the taxpayers in respect of refund of State taxes as well.

Inclusion of the 'National Appellate Authority' for Advance ruling as Adjudicating Authority

Section 2(4) of CGST Act 2017

H&A Comments:

The National Appellate Authority for Advance Ruling has been defined as Adjudicating Authority.

The definition of 'adjudicating authority' in clause (4) of section 2 of the CGST Act is being amended so as to include 'the National Appellate Authority for Advance Ruling' (which is being created by various amendments in Chapter XVII of the CGST Act) from the definition of 'adjudicating authority'.

Amendment to definition under Advance Ruling Section

Section 95 of CGST Act 2017.

Advance ruling definition has been amended to include the decision of National Appellate Authority for Advance Ruling to applicant on the matters specified in Section 101C.

H&A Comments:

Amendment to Advance ruling definition and insertion of definition of National Appellate Authority for Advance Ruling has been provided to bring constitute the National Appellate Authority for Advance Ruling.

'National Appellate Authority for Advance Ruling' has been defined an Authority known as the National Appellate Authority for Advance Ruling for hearing appeals made under section 101B

Provisions for National Appellate Authority for Advance Ruling

Section 101A, 101B and 101C of CGST Act 2017.

1. Where ruling of Advance Authority of two or more state or union territories are conflicting, officer of distinct person from the state in which advance rulings have been given who are aggrieved by such advance ruling, may prefer an appeal to National Appellate Authority within 30days or extended period from the date of communication of the last conflicting ruling
2. However, Commissioner may file the appeal within 90days or extended period from the date of communication of the last conflicting ruling sought to be appealed.
3. Forms and fees to be submitted to prefer the appeal may be prescribed under notification issued at later date.
4. Opportunity to be heard to both the parties of appeal shall be given.
5. Constitution, qualification, appointment, tenure, conditions of services of the National Appellate Authority for Advance Ruling (NAA) has been prescribed; to provide for procedures to be followed for hearing appeals against conflicting advance rulings pronounced on the same question by the Appellate Authorities of two or more States or Union territories in case of distinct persons; and to provide that the National Appellate Authority shall pass order within a period of 90 days from the date of filing of the appeal respectively
6. Following would be the members of the NAA

Following are the points relating to vacancy, salary and allowance and resignation of President and Member to be noted –

1. In case of vacancy in office of president by reason of his death, resignation or otherwise, the senior most Member shall act as the President until the appointment of new President.
2. Where the President is unable to discharge his functions owing to absence, illness or any other cause, the senior most Member shall act as the President until the existing President resumes the office.
3. No appointment of the Members shall be invalid merely by the reason of any vacancy or defect in the constitution of the Selection Committee.
4. Before appointing any person as the President or Members, the Government shall satisfy itself that such person does not have any financial or other interests which are likely to prejudicially affect his functions.
5. The salary, allowances and other terms and conditions of service of the President and the Members shall be prescribed.
6. Resignation by both President and any Member shall be provided notice in writing under his hand addressed to the Government, resign from his office. From the date of notice provided, the President or Member shall continue to hold office until the expiry of 3months from the date of receipt of such notice by the Government, or until a person duly appointed as his successor enters upon his office or until the expiry of his term of office, whichever is the earliest.
7. Removal of following President or Member by the Government may, after consultation with the Chief Justice of India and the enquiry of Judge of Supreme court nominated by the Chief Justice of India. Such persons shall be suspended from the office             
   • been adjudged an insolvent; or
   • been convicted of an offence which, in the opinion of such Government involves moral turpitude; or
   • become physically or mentally incapable of acting as such President or Member; or
   • acquired such financial or other interest as is likely to affect prejudicially his functions as such President or Member (opportunity of being heard to be given); or
   • so abused his position as to render his continuance in office prejudicial to the public interest (opportunity of being heard to be given):

8. Any order passed by it shall be amended so as to rectify any error apparent on the face of the record, within a period of 6 months from the date of the order, except under certain specified circumstances.
1. The advance ruling pronounced by the National Appellate Authority shall be binding, unless there is a change in law or facts, on the applicants, being distinct person and all registered persons having the same Permanent Account Number and on the concerned officers or the jurisdictional officers in respect of the said applicants and the registered persons having the same Permanent Account Number.
10. Advance ruling pronounced shall be void where the ruling has been obtained by fraud or suppression of material facts or misrepresentation of facts.
11. NAA shall have all the powers of a civil court under the Code of Civil Procedure, 1908 for the purpose of exercising its powers under the Act.
50. the National Appellate Authority shall have power to regulate its own procedure.

H&A Comments:

Advance Authority Rulings of one state or union territory are binding on the applicant of that state or union territories and the jurisdictional officer. However, same is not binding on the same person having same PAN being a distinct person as the powers of AAR's are confined to that state or union territory. Hence, with proposition of constituting National Appellate Authority, the decision given by such authority will be binding on the all the distinct persons under the same PAN and the jurisdictional officers of different state of the distinct persons under the same PAN.

Empowerment National Antiprofiteering Authority to impose penalty

Section 171(2) of CGST Act 2017.

Amended has been proposed in the Act to empower the National Anti-profiteering Authority to impose penalty equivalent to 10% of the profiteered amount where on examination comes to the conclusion that any registered person has profiteered.

However, no penalty shall be leviable if the profiteered amount is deposited within thirty days of the date of passing of the order by the Authority.

H&A Comments:

There was no specific penalty for the non-compliance of the order passed by the National Anti-profiteering Authority and the orders were given only to recovery of amount so profiteered. In order to prevent the so profiteering and to recover the amounts early government has proposed to penalise the non-complaints with amount equivalent to ten per cent of the amount so profiteered. Profiteered amount has also been defined on which penalty has to be paid.

Expression 'profiteered' shall mean the amount determined on account of not passing the benefit of reduction in rate of tax on supply of goods or services or both or the benefit of input tax credit to the recipient by way of commensurate reduction in the price of the goods or services or both

Exemption from tax for Uranium Ore Concentrate

(to be notified)

H&A Comments: 

Earlier Uranium Ore Concentrate was taxable till 14th November 2017 @ 5% which was subsequently been exempted prospectively. It has been proposed the exempt for the period from 1st July 2017 to 14th November 2017. No refund will be provided for the taxes deposited to the exchequer. However, taxes due which were not paid shall not be questioned.

Supplies of 'Uranium Ore Concentrate' was exempted from 14^th November 2017 wide Notification No. 2/2017-Central Tax (Rate), Integrated Tax (Rate) and Union Territory Tax (Rate) dated the 28th June 2017. The retrospective exemption has been provided for 1st July 2017 to 14th November 2017. No refund shall be made of all such tax which has been collected from the recipient and paid to the government.

SABKA VISHWAS (LEGACY DISPUTE RESOLUTION SCHEME) 2019

Background

In order to curb the pending litigations under the erstwhile Indirect Tax Enactments, a dispute resolution scheme namely Sabka Vishwas (Legacy Dispute Resolution Scheme), 2019 ('LDRS' or 'the scheme') has been proposed in Chapter V of the Finance Bill, 2019 (55 of 2019). The scheme offers to grant relief from tax amount, penalty, interest, etc. and immunity from prosecution on account of pending disputes upon payment of the specified tax dues.

The scheme would be applicable from a date to be notified.

Important Definitions

Eligibility of the declaration

In terms of Section 124, any person can file the declaration covering the amount payable by him except ineligible declarants.

In-eligible declarants:

In general the scheme is available to all persons except few persons as listed down in Section 124 (1), as follows;

1. An appeal which was filed and such appeal has been heard finally before 30^th June 2019.
2. An SCN which was issued before 30^th June 2019, of which final hearing has taken place before such date.
3. Cases where SCN has been issued for recovery of 'erroneous refund' or 'refund otherwise'
4. Persons who have been convicted for an offense punishable under indirect tax enactment cannot file declaration with respect to such matter

H&A Comments:

The language of this exclusion is ambigious in as much as the clause appears to apply qua person rather than qua matter in subject to enquiry/ investigation/ audit – accordingly, disqualifying a person subject to enquiry/ investigation/ audit as on 30^th June 2019 to make any disclosure other than quantified amount therein.

Persons who have been subjected to enquiry/ investigation/ audit and the amount of duty thereon has not been quantified before 30^th June 2019 –

• persons cannot make voluntary disclosure –
• where they have been subject to enquiry/ investigation/ audit

where they have filed the return and indicated the tax payable but have not paid it

H&A Comments:

Similar to above, the language of this clause is ambiguous in as much as persons who have been subject enquiry/ investigation/ audit won't be able to make any declaration – on the other hand the intent appears to be disqualify only those matters which have been identified in enquiry/ investigation/ audit or amount that has been indicated in returns but not paid

Persons who have filed application before Settlement Commission for settlement of case

H&A Comments:

Many of the restrictions really do not make sense as there is no substantial difference between the cases where the relief is being granted and relief is being restricted. The differences are as minor as hearing of the case happened and not happened, gone for settlement of case on payment of tax not gone. These conditions may be relooked by the committee to grant relief even for such assesses.

Declarations with respect to excisable goods set forth in Fourth Schedule of Central Excise Act, 1944 i.e. Tobbacco and Petroleum Products

Amount Payable under Scheme:

The 'amount payable' under the scheme shall be 'tax dues' less 'tax relief'. The manner of computation of tax dues and the cases which can be declared under the scheme are enlisted in Section 122, which as follows;

1. Appeal stage: Amount of duty being contested in an appeal which has been filed before appellate forum [either by assessee or by the department] and is pending disposal as on 30^th June 2019 which is not finally heard before that date.
2. SCN stage: Amount of duty as stated to be payable in a show cause notice which has been received by the assessee and is pending adjudication as on 30^th June 2019 and is not
   1. Finally heard by the adjudicating authority before 30^th June 2019;
   2. No Application is made before the settlement commission for settlement of the case before 30^th June 2019.
3. Audit/ Enquiry stage: Amount of duty payable which has been quantified also on account of an enquiry or investigation or audit which is pending.

H&A comments:

In case of amount already declared in returns and remains unpaid will be considered as arrears and there is no need to consider and make it as voluntary disclosure.

Voluntary disclosure: Any amount which the assessee wishes to declare voluntarily.

1. Amount in arrears: Any amount which is in arrears against the assessee

1. Determination order (OIO) stage: Amount of duty determined under an order in original which is outstanding as on 30^th June 2019 and the time-limit to file appeal against such order has elapsed.
2. Outstanding Order in Appeal: Amount of duty confirmed under an order in appeal which is outstanding as on 30^th June 2019 and the appeal has not been filed whether the time-limit to file appeal against such order has elapsed.
3. Amounts payable declared in returns but not paid.
4. Confirmed demands after exhausting of appellate remedy

Quantification of reliefs in the declaration

Section 123 envisage the relief of taxes as per the below table; In the scheme, Section 128 provides additionally complete waiver of interest and penalty is also provided along with the tax relief mentioned below.

Procedure of making declaration

The steps involved in the admission of the declarations are as follows;

Withdrawal of Appeal:

1. Where the appeal, reference or reply to show cause was pending at appellate forum other than Supreme Court or High Court, then notwithstanding any other provisions under the erstwhile law, such appeal or reference or reply shall be deemed to be withdrawn.
2. Where the writ petition, appeal or reference was pending at Supreme Court or High Court, then the declarant shall have to file an application before the Court for withdrawing of such writ petition, appeal or reference with the leave of court and would have to submit the proof of withdrawal to DC in prescribed manner along with the proof payment of duty.

Discharge Certificate

Upon payment of the amount indicated in statement of amount payable and proof of withdrawal of appeal/ reference/ writ petition, the DC shall issue a discharge certificate within 30 days of producing proof of payment and such withdrawal.

Consequence of Discharge Certificate

In terms of Section 128 (1), the issuance of discharge certificate with respect to the amount payable, shall be conclusive as to the matter and time period stated therein, and;

1. The declarant shall not be liable to pay any further duty, interest or penalty with respect to the matter and time period covered in the declaration
2. The declarant shall not be prosecuted under the indirect tax enactment with respect to the matter and time period covered in the declaration
3. No matter and time period covered by the declaration shall be reopened in any other indirect enactment.

Enactments under which relief is available

In terms of Section 121, tax dues under following enactments are covered for relief under the scheme;

• The Central Excise Act, 1944 or the Central Excise Tariff Act, 1985 or Chapter V of the Finance Act, 1994 and the rules made thereunder;
• The Agricultural Produce Cess Act,1940;
• The Coffee Act, 1942;
• The Mica Mines Labour Welfare Fund Act, 1946;
• The Rubber Act, 1947;
• The Salt Cess Act, 1953;
• The Medicinal and Toilet Preparations (Excise Duties) Act, 1955;
• The Additional Duties of Excise (Goods of Special Importance) Act, 1957;
• The Mineral Products (Additional Duties of Excise and Customs) Act, 1958;
• The Sugar (Special Excise Duty) Act, 1959;
• The Textiles Committee Act, 1963;
• The Produce Cess Act, 1966;
• The Limestone and Dolomite Mines Labour Welfare Fund Act, 1972;
• The Coal Mines (Conservation and Development) Act, 1974;
• The Oil Industry (Development) Act, 1974;
• The Tobacco Cess Act, 1975;
• The Iron Ore Mines, Manganese Ore Mines and Chrome Ore Mines Labour Welfare
• Cess Act, 1976;
• The Bidi Workers Welfare Cess Act, 1976;
• The Additional Duties of Excise (Textiles and Textile Articles) Act, 1978;
• The Sugar Cess Act, 1982;
• The Jute Manufacturers Cess Act, 1983;
• The Agricultural and Processed Food Products Export Cess Act, 1985;
• The Spices Cess Act, 1986;
• The Finance Act, 2004 [Higher Education Cess on Service Tax and Central Excise Duty];
• The Finance Act, 2007  [Secondary & Higher Education Cess on Service Tax and Central Excise Duty];
• The Finance Act, 2015 [Swachch Bharat Cess];
• The Finance Act, 2016 [Krishi Kalyan Cess]

Limitations of the scheme

The opting of scheme requires the declarant to discharge the amount payable through cash i.e. ITC available under either earlier enactment or under GST are not permissible to be utilized against amount payable

The tax discharged under the scheme cannot be taken as ITC under the GST [by the declarant himself]

H&A Comments:

On the face of it, it appears that government wish to wholesome close the files that are lying before various judicial and quasi-judicial bodies. Other than taking direct hit on the un-relieved tax dues, interest and penalties, the government doesn't intent to grant set off via ITC. Unlike VCES, 2013, the objective of the scheme is increase the tax base but set aside the legacy issues to the extent possible. Therefore government doesn't want to take total hit on the revenue by extending ITC of the tax discharged under the scheme and accordingly ITC/CENVAT credit utilisation is restricted for payment of amount under this scheme.

Cannot be passed to another entity by the declarant so as to enable the other entity to take the ITC of such discharged tax H&A Comments:

It may amount to gross injustice denying the pre deposit refund (if any) where the same exceeds the tax amount determined. In multiple disputes lying before the Hon'ble Supreme Court and High Court, pre deposit to the extent of 100% has been deposited. Therefore those cases are most hard hit in as much as though the amount payable stands reduced on account of the relief, however the said being deposited as pre deposit stood lost its charm.

The pre-deposit amount paid by the declarant, even if in excess of the amount payable by the declarant shall not be available as refund to the declarant i.e. the government is stipulating complete forfeiture of the pre deposit regardless of anything.

Other aspects

1. Power to make rules: Section 131 empowers the Central Government to frame rules with respect to form of declarations, constitution of DC and its rules of procedure and functioning, form and manner of estimation of amount payable etc.
2. Power to issue clarifications: Section 132 grants power to Central Board of Indirect Taxes and Customs to issue orders, instructions and directions to the authorities for the proper administration of the scheme
3. Power to remove difficulties: Section 133 power to Central Government to issue removal of difficulty orders to remove the difficulty in giving effect to the provisions of the scheme, which should not be inconsistent with the provision of the scheme
4. Error apparent on face: Section 127 enables, curing of arithmetic error or clerical error in the statement of amount payable which is apparent on the face of record, by DC within 30 days of issue of the statement

Comparison with VCES

1. Rigidity of the procedural time-lines: There are multiple time bound dates that are to be complied in order to avail the amnesty viz. date of declaration before due date [to be notified], date of payment after statement of payable. In the context VCES Scheme the Hon'ble Courts [Kasmisons Builders Pvt. Ltd. 2016 (43) STR 348 (Ker.), Hotel Satish Executive 2018 (12) GSTL 348 (Tri. – Mumbai)] have declared that timelines of the scheme are rigid and not open-able to any natural justice relief, other than show-cased technical faults. It would be intriguing as to how the time-lines are treated under the scheme
2. Wider in scope than VCES: The scheme being wider in scope than VCES covering cases where enquiry/ investigation/ audit has been conducted/ instituted/ completed all being eligible for amnesty, therefore disputes of VCES time where in cases where investigations/ audit was discarded being non-voluntary and earthed during investigations [Hotel Southson Pvt. Ltd. 2018 (18) GSTL24 (Mad.).
3. Meritorious cases: The impugned scheme alike VCES ignores the merits of the cases and strictly goes for the closing of the cases based on relief and grieve measure, where both parties (government and private assessee) set to enter into trade offs. The merits of the cases does not appears susceptible to meritorious examination, other than the 'unclarified estimation formulation' of the DC.

Customs Act 1962

Enpowering specified person for delivering of departure manifest / export manifest or export report

Amendment to section 41

H&A comment:

Earlier only the person in-charge for vessel/aircraft or any vehicle was made responsible to deliver departure manifest/export manifest or export report. However through this proposed amendment, the Government has created space to specify any other person other than the person in-charge of the conveyance to be held responsible for delivering the documents supra. This amendment would awaken the exporter (who may be specified by government), be responsible for the departure manifest/export manifest or export report.

Section 41 is being amended so as to provide a facility that the departure manifest can also be furnished to a person notified by the Central Government, in addition to the person-in-charge of the conveyance

Verification of Identity and compliance of the assessee

Insertion of New Chapter XIIB

A new chapter XIIB titled 'Verification of Identity and Compliance' is being inserted. New section 99B introduced under this chapter empowers proper officer of Customs to carry out verification of a person for ascertaining compliance with the provision of the Customs Act or any other law for the time being in force, for protecting the interests of revenue or to prevent smuggling in the manner as may be prescribed. It is proposed to do the verification of the person through the Aadhaar number or through such other alternative and viable means of identification as may be prescribed through the regulations. It also empowers the Board interalia to make regulations to exempt such persons or class of persons who may not be required to undergo the said verification. Failure to comply with the specified provisions of this section may result in suspension or denial of certain benefits.

H&A comments:

The proper officer may require any person (other than a person/or class of persons who may be prescribed) whose verification, he consider to be necessary for protecting the interest of revenue and or preventing smuggling to undergo authentication or furnishing Aadhar number, such other document or information as may be prescribed.

Further failing to comply with the above requirement, the officer may by order suspend:-

1. clearance of imported goods or export goods;
2. sanction of refund;                                                                                                                            
3. sanction of drawback;
4. exemption from duty;
5. license or registration granted under this Act; or

any benefit, monetary or otherwise, arising out of import or export, relating to such person, subject to such conditions as may be prescribed;

Scanning or screening of the human body

Amendment of section 103.

Section 103 is being amended so as to-

1. Substitute sub-section (1) in order to enable the proper officer to scan or screen, with the prior approval of Deputy Commissioner of Customs or Assistant Commissioner of Customs, any person referred to in sub-section (2) of section 100 who has any goods liable to confiscation secreted inside his body. The proper officer can directly furnish the report of the said screening or scanning to the nearest magistrate if such goods are found secreted inside the body of the said person. 
2. so as to enable the magistrate to take action upon the report of scanning or screening by the proper officer under sub-section (6).

H&A comments:

Through this amendment the proper officer is empowered with the right of scan/screen the person listed below:-

• Any person who has landed from or is about to board, or is on board any vessel within the Indian customs waters;
• Any person who has landed from or is about to board, or is on board a foreign-going aircraft;
• Any person who has got out of, or is about to get into, or is in, a vehicle, which has arrived from, or is to proceed to any place outside India;
•  Any person not included in clauses (a), (b) or (c) who has entered or is about to leave India;
•  Any person in a customs area.

With his consent and without prejudice to any of his rights available to such person under any other law for the time in force.

Moreover such scanned or screened report from the officer as mentioned above can be considered as evidence before the magistrate.

Arrest - Change in threshold limit and addition of offences

Amendment of section 104

Section 104 is being amended so as to-

1. Empower an officer of customs to arrest a person who has committed an offence outside India or Indian Customs waters also under sub-section (1).  
2. Insert two new clauses (c) and (d) in sub-section (4) so as to specify two particular offences which shall be cognizable. 
3. Insert a new clause (e) in sub-section (6) so as to specify a particular offence which shall be non-bailable. 

H&A comments:

By above amendments, the governments has extended the powers of the officers to arrest the following:-

• Person who committed an offence such as false declaration/document, obstruction of officer of customs, evasion or prohibition of duty, offences by customs officer, preparation to export in contravention to the provisions of the act even if they residing outside India (extension of arrest jurisdiction) subject to international law/treaties with other countries.
• Person who has fraudulently obtained and utilized instruments (scrip/authorization/certificate/licence or any other document issued under FT(D & R)Act, 1992) or avail/attempting to avail drawback/exemption from duty where the duty amount exceeds fifty lakh rupees

Insert an Explanation so as to define the term instrument

Amendment in Recovery methods

Amendment of section 110

Section 110 is being amended so as to-

1. Substitute the existing proviso in sub-section (1) with two provisos so as to specify the conditions under which the custody of seized goods could be given to certain person. The amendment also seeks to specify the conditions, under which the custody of such goods, where it is not practicable to seize such goods, could be given to certain persons. 
2. Insert a new sub-section (5) so as to empower the proper officer to provisionally attach any bank account for safeguarding the government revenue and prevention of smuggling, for a period not exceeding six months. It is also being provided that a Principal Commissioner of Customs or Commissioner of Customs may further extend the period of attachment up to six months. 

H&A comments:  

By this amendment, the government is extended the provision of seizure from owner/beneficial owner/any other person holding himself out to be the importer/any other person from whose custody such goods have been seized and if the seizure, removal, transport, store or take physical possession of seized goods is not practicable, then on execution of an undertaking by such person supra that he shall not remove, part with or otherwise deal with the goods except with the previous permission of the proper officer.

Further to protecting the interest of the revenue or prevent the smuggling the proper officer with prior approval (with order in writing) of principal commissioner/commissioner of customs may provisionally attach bank account for a period of six months which can be extended further six months

Providing powers to release the attached bank account

Amendment of section 110A.

H&A comments: 

Amendment provides a facility to release the seized goods/attached bank account to the owner/bank account holder on taking a bond from him in proper form with such securities and conditions as adjudicating authority may require.

Section 110A is being amended so as to empower an adjudicating authority to release bank account provisionally attached under section 110 to the account holder on fulfillment of certain conditions.

Penalty for obtaining instrument by fraud, etc.

New section 114AB.

A new section 114AB is being inserted so as to provide that any person who has obtained any instrument by fraud, collusion, wilful misstatement or suppression of facts and such instrument has been utilized by such person or any other person for discharging duty, such person to whom the instrument was issued shall be liable for penalty not exceeding the face value of such instrument. An Explanation to define the term instrument is also being inserted.

H&A comment:

The new section empowers to levy penalty to the extent of face value of the scrip for obtaining the scrip by fraud, collusion, wilful misstatement or suppression of facts. However, for utilizing such fraudulently obtained instruments arrest provisions under section 110 of Custom Act, 1962.

Increase in general penalty

Amendment of section 117.

Section 117 is being amended so as to increase the maximum limit of penalty from one lakh rupees to four lakh rupees.

H&A comment:

The general penalty wherever no specific penalty has been prescribed for any contravention or failing to comply with any of the provisions of the act has been increased from one lakh to four lakh rupees.

Discontinuation of fine in lieu of confiscation of goods

Amendment of section 125.

H&A comment:

The amendment is intended to resolve the interpretational issue prevailed previously and clarified that, only the fine under section 125 would not be applied in case when the proceeding are deemed to be closed under proviso to section 28(2) or 28(6)(i) of Customs Act, 1962

First proviso to section 125 is being amended so as to provide that in respect of cases of covered under deemed closure proceedings under section 28, no fine in lieu of confiscation shall be imposed on the infringing goods.

Duty evasion includes payment by instrunents obtained fraudulently

Amendment of section 135.

Sub-section (1) of section 135 is being amended so as to-

a. To insert a new clause (e) therein to make obtaining of an instrument from any authority by fraud, collusion, wilful misstatement or suppression of facts, where such instrument has been utilized by any person a punishable offence.

b. Insert a new sub-item (E) under item (i) to make obtaining an instrument from any authority by fraud, collusion, wilful misstatement or suppression of facts, where such instrument has been utilized by any person a punishable offence if the duty relatable to utilization of the instrument exceeds fifty lakhs of rupees.

c. Insert an Explanation to define the term instrument.

H&A comment:-

By this amendment the government has notified the activity of obtaining, obtaining and utilizing the instrument as evasion of duty or prohibitions. Further the penal provisions for such activities has been enabled by amending section 114 AB, 110 of Customs Act, 1962 respectively

Procedures for amendment of documents

Amendment of section 149.

Section 149 is being amended so as to empower Board to make regulations specifying time, form, manner, restrictions and conditions for amendment of any document.

H&A comment: The amendment tends to provide the powers to CBIC to specify the forms/manner/time, restrictions and conditions for any document.

Power to CBIC to make regulations

Amendment of section 157.

Section 157 is being amended so as to empower the Board to make regulations for purposes of sections 99B and 149 respectively.

H&A comment:

The amendment tends to provide the powers to CBIC to specify the manner, time limit for authentication under chapter XIIB 'Verification of Identity and Compliance', document/information to be furnished, time limit for furnishing of such documents/information or form/manner/time limit for submission of alternative means of identification, specifying exempted persons or class of persons from chapter XIIB.

Further it provides to specify the form/manner/time limit/ restrictions and conditions for amendment of any document under section 149.

Increase in general penalty

Amendment of section 158.

H&A comment: The general penalty wherever no specific penalty has been prescribed for any contravention or failing to comply with any of the provisions of the rules/regulations made by the board has been increased from fifty thousand to two lakh rupees.

Sub-section (2) of section 158 is being amended so as to increase the maximum limit of penalty for violation of any provision of rules or regulations from fifty thousand rupees to two lakh rupees.

Customs Tariff Act, 1975

Amendments in the first schedule to the Customs Tariff Act, 1975 

* Will come into effect immediately owing to a declaration under the Provisional Collection of Taxes Act, 1931.

Other proposals involving changes in BCD rates and clarificatory amendments

Proposals involving changes in export duty rates

Amendment in the sixth schedule to the finance act, 2018

*  Will come into effect immediately owing to a declaration under the Provisional Collection of Taxes Act, 1931.

Effective change in rate of road and infrastructure cess on petrol and diesel

Retrospective amendments of rate notifications

Other miscellaneous changes

EXCISE

Amendments in the fourth schedule to the Central Excise Act, 1944

* Will come into effect immediately owing to a declaration under the Provisional Collection of Taxes Act, 1931.

Proposals involving change in excise duty rates through notifications: