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 1st 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

Member

Qualification

Appointed by

Tenure

President

has been a Judge of the Supreme Court or is or has been the Chief Justice of a High Court, or is or has been a Judge of a High Court for a period not less than five years

Government after consultation with the Chief Justice of India

3years upto 45years of age.

Technical Member (Centre)

is or has been a member of Indian Revenue (Customs and Central Excise) Service, Group A, and has completed at least fifteen years of service in Group A

Government on the recommendations of a Selection Committee

5 years upto 65 years of age

Technical Member (State)

is or has been an officer of the State Government not below the rank of Additional Commissioner of VAT or the Additional Commissioner of State tax with at least 3 years of experience in the administration of an existing law or the State Goods and Services Tax Act or in the field of finance and taxation

Government on the recommendations of a Selection Committee

5 years upto 65 years of age

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):
  1. 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.
  2. 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.
  3. Advance ruling pronounced shall be void where the ruling has been obtained by fraud or suppression of material facts or misrepresentation of facts.
  4. 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.
  5. 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 14th 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

Amount in Arrears [Section 120 (c)]

means the amount of duty which is recoverable as arrears of duty under the indirect tax enactment, on account of—

(i) no appeal having been filed by the declarant against an order or an order in appeal before expiry of the period of time for filing appeal; or

(ii) an order in appeal relating to the declarant attaining finality; or

(iii) the declarant having filed a return under the indirect tax enactment on or before the 30th day of June, 2019, wherein he has admitted a tax liability but not paid it;

Amount of duty [Section 120 (d)]

means the amount of central excise duty, the service tax and the cess payable under the indirect tax enactment

Amount payable [Section 120 (e)]:

means the final amount payable by the declarant as determined by the designated committee and as indicated in the statement issued by it, in order to be eligible for the benefits under this Scheme and shall be calculated as the amount of tax dues less the tax relief

H&A Comments: It is unknown where the amount finally not determined by the designated committee is challengeable on merits or not, though from the intent of the scheme it appears that the scheme ipso facto fails where the amount determined by DC is challenged.

Audit [Section 120(g)

Means any scrutiny, verification and checks carried out under the indirect tax enactment, other than an enquiry or investigation, and will commence when a written intimation from the central excise officer regarding conducting of audit is received.

Enquiry or Investigation [Section 120 (m)]

Means enquiry or investigation under any of the indirect tax enactment, shall include the following actions, namely:—

(i) search of premises;

(ii) issuance of summons;

(iii) requiring the production of accounts, documents or other evidence;

(iv) recording of statements;

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 30th June 2019.
  2. An SCN which was issued before 30th 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 30th 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 30th 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 30th 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 30th June 2019 and is not
    1. Finally heard by the adjudicating authority before 30th June 2019;
    2. No Application is made before the settlement commission for settlement of the case before 30th 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 30th 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 30th 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.

S. No.

Particulars

Amount payable and relief under the scheme.

Amount of duty is up to INR 50 Lakhs

Amount of duty exceeds INR 50 Lakhs

Relief

Payable

Relief

Payable

1

Tax dues at SCN stage

70%

30%

50%

50%

2

Tax dues at appeal stage [appeal being pending disposal as on 30th June 2019]

70%

30%

50%

50%

3

Tax dues at outstanding OIO/ OIA stage [where appeal is not filed]

60%

40%

40%

60%

4

Tax dues – in arrears otherwise

60%

40%

40%

60%

5

Tax dues which have been declared in returns but not paid by the assessee

60%

40%

40%

60%

6

Tax dues which are linked to enquiry, investigation or audit – amount being quantified before 30th June 2019

70%

30%

50%

50%

7

Tax dues at SCN stage with respect to penalties, late fees – where the amount of duty is Nil or has been paid

100%

0%

100%

0%

8

Voluntary Disclosure

0%

100%

0%

100%

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

Sl  No

Amendment

Comments

1

Section 9 is being amended to insert sub-section (1A) to provide for anti-circumvention measure in respect of countervailing duty.

The Central Government is of the opinion that, that circumvention of countervailing duty imposed under sub-section (1) has taken place, either by altering the description or name or composition of the article on which such duty has been imposed or by import of such article in an unassembled or disassembled form or by changing the country of its origin or export or in any other manner, whereby the countervailing duty so imposed is rendered ineffective, it may extend the countervailing duty to such other article also.

2

Section 9C is being amended so as to provide that appeal against an order of determination or review regarding the existence, degree and effect of increased volume of imports of any article requiring imposition of safeguard duty, shall lie with Customs Excise and Service Tax Appellate Tribunal.

The amendment been provided to make appeal  in CESTAT against an order of determination or review regarding the existence, degree and effect of increased volume of imports of any article requiring imposition of safeguard duty

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

AMENDMENTS

A.

Tariff rate changes for  Basic Customs Duty [to be effective from 06.07.2019]*  [Clause [87(a)] of the Finance (No. 2) Bill, 2019]

Rate of Duty

S.  No

Heading, sub-heading tariff item

Commodity

 

From

To

 

 

Construction Materials

 

 

1

3918

Floor covering of plastics, Wall or ceiling coverings of plastics

10%

15%

2

6905,

      6907

Ceramic roofing tiles and ceramic flags and pavings, hearth or wall tiles 

10%

15%

3

8302

Base metal fittings, mountings and similar articles suitable for furniture, doors, staircases, windows, blinds, hinge for auto mobiles 

10%

15%

 

 

Precious Metals

 

 

4

7106

Silver (including silver plated with gold or platinum) unwrought or in semimanufactured forms, or in powdered form

10%

12.5%

5

7107 00 00

Base metals clad with silver, not further worked than semi-manufactured

10%

12.5%

6

7108

Gold (including gold plated with platinum) unwrought or in semimanufactured forms, or in powder form 

10%

12.5%

7

7109 00 00

Base metals or silver, clad with gold, not further worked than semimanufactured

10%

12.5%

8

7110

Platinum, unwrought or in semi-manufactured form, or in powder form

10%

12.5%

9

7111 00 00

Base metals, silver or gold, clad with platinum, not further worked than semimanufactured

10%

12.5%

10

7112

Waste and scrap of precious metals or of metal clad with precious metals; other waste and scrap containing precious metal compounds, of a kind used principally for the recovery of precious metal

10%

12.5%

 

 

Automobile parts 

 

 

11

6813

Friction material and articles thereof (for example, sheets, rolls, strips, segments, discs, washers, pads), not mounted, for brakes, for clutches or the like, with a basis of asbestos, of other mineral substances or of cellulose, whether or not combined with textile or other materials. 

10%

 

15%

12

7009

Glass mirrors, whether or not framed, including rear-view mirrors

10%

15%

13

8301 20 00

Locks of a kind used in motor vehicles 

10%

15%

14

8421 23 00

Oil or petrol filters for internal combustion engines

7.5%

10%

15

8421 31 00

Intake air-filters for internal combustion engines

7.5%

10%

16

 8421 39 20,

 8421 39 90

Air purifiers or cleaners and other filtering or purifying machinery and apparatus for gases 

7.5%

10%

17

8512 10 00,

8512 20 10,

 8512 20 20

Lighting or visual signaling equipment of a kind used in bicycles or motor vehicles 

10%

   15%

18

8512 20 90,

 8512 30 90

Other visual or sound signalling equipment for bicycles or motor vehicles

7.5%

15%

19

8512 30 10

Horns for vehicles

10%

15%

20

8512 90 00

Parts of visual or sound signalling equipment for bicycles or motor vehicles

7.5%

10%

21

8512 40 00,

8539 10 00,

8539 21 20,

 8539 29 40

Windscreen wipers, defrosters and demisters, Sealed beam lamp units and other lamps for automobiles

10%

15%

22

8706

Chassis fitted with engines, for the motor vehicles of headings 8701 to 8705. 

10%

15%

23

8707

Bodies (including cabs), for the motor vehicles of headings 8701 to 8705

10%

15%

 

 

Electronics and Electrical equipments

 

 

24

8415 90 00

Indoor and outdoor unit of split –system air conditioner

10%

20%

25

8518 21 00, 8518 22 00

Loudspeaker

10%

15%

26

8521 90 90

Digital Video Recorder (DVR) and Network Video Recorder (NVR)

15%

20%

27

8525 80 

CCTV camera and IP camera

15%

20%

28

9001 10 00

Optical Fibres, optical fibre bundles and cables

10%

15%

 

Miscellaneous changes in Tariff Schedule

29

9804

Chapter Note 7 to be inserted in Chapter 98 so as to exclude printed books imported for personal use from the purview of heading 9804. This heading covers all dutiable articles imported for personal use and attracts 28% IGST. This amendment would exclude printed books from this heading and they would be subject to the applicable merit rate.

B.

Amendments not affecting rates of duty [Clause  87(b)  of the Finance (No. 2) Bill, 2019]

30

First Schedule to the Customs Tariff Act, 1975 is amended to:

(i) Create specific tariff lines for specific products, presently classified as others; (ii) Rectify the errors to align it with HSN.

These changes would come into effect from a date to be notified by the Central Government in the official gazette.

* 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

Sl.

No

Heading, sub-heading tariff item

Commodity

From

To

 

 

Defence 

 

 

1

Any Chapter  

Specified Defence equipment and their parts imported by the

Ministry of Defence or the Armed Forces

Applicable rate

Nil

 

 

Medical Devices

 

 

2

Any Chapter

Raw material, parts or accessories  for use manufacture of artificial kidneys, disposable sterilized dialyzer and micro-barrier of artificial kidney

Applicable rate

Nil

 

 

Food processing

 

 

3

0801 32 10

Cashew kernel broken 

Rs 60/ Kg or

45%, whichever is higher

70%

4

0801 32 20,

0801 32 90

Cashew kernel whole, Cashew nuts shelled, others 

Rs 75/ Kg or

45%, whichever is higher

70%

 

 

Nuclear Fuels and Nuclear Energy projects

 

 

5

2612 10 00

All forms of Uranium ores and Concentrates for generation of nuclear power (Uranium concentrate U3O8 already exempt)

2.5%

Nil

6

2844 20 00

All goods for use in generation of Nuclear power (Certain goods such as sintered natural uranium dioxide already exempt)

7.5%

Nil

7

9801

All goods required for setting up of the following power projects under project imports: -

  1. Mahi Banswara Atomic Power project- 1 to 4, Mahi

Banswara site Rajasthan

  1. Kaiga Atomic Power project – 5 & 6, Kaiga site, Karnataka
  2. Gorakhpur Atomic Power project- 3 & 4, GHAVP, Haryana
  3. Chutka Atomic Power project- 1 & 2, Chutka site, Madhya Pradesh

Applicable rate

Nil

 

 

Oils and associated chemicals  

 

 

8

Chapter 15, 

2915 70,

3823 11 00,

3823 12 00, 3823 13 00,

3823 19 00

Palm stearin and other oils, having 20% or more free fatty acid, Palm Fatty Acid Distillate and other industrial monocarboxylic fatty acids, acid oils from refining, for use in manufacture of soap and oleochemicals.

Nil

7.5%

 

 

Petroleum and Petrochemicals

 

 

9

2709 00 00

Petroleum Crude

Nil

Re. 1 per tonne

10

2710

Naphtha

5%

4 %

11

2903 15 00

Ethylene dichloride (EDC)

2%

Nil

12

2910 20 00

Methyloxirane (Propylene Oxide)

7.5%

5%

13

 

Plastic and Rubber  

 

 

14

3904

Poly Vinyl Chloride

7.5%

10%

15

3926 90 91,

3926 90 99 

Articles of plastics 

10%

15%

16

4002 31 00

 All goods i.e. Butyl Rubber

5%

10%

17

4002 39 00

 Chlorobutyl rubber or bromobutyl rubber

5%

10%

 

 

Paper and Paper products

 

 

18

 48

  1. Newsprint 
  2. Uncoated paper used for printing of newspapers
  3. Lightweight coated paper used for printing of magazines

Nil

10%

19

4901 10 10,

4901 91 00,

4901 99 00

Printed books (including covers for printed books) and printed manuals, in bound form or in loose-leaf form with binder, executed on paper or any other material including transparencies.

Nil

5%

 

 

Textiles

 

 

20

5101

Wool Fibre

5%

2.5%

21

5105

Wool Tops

5%

2.5%

 

 

Flooring materials

 

 

22

2515 12 20,

6802 10 00, 6802 21 10,

6802 21 20,

6802 21 90,

6802 91 00,

6802 92 00

Marble Slabs

20%

40%

 

 

Inputs for Optical Fibres

 

 

23

28 or 70

Raw materials used in manufacture of Preform of Silica:-

  1. Refrigerated Helium Liquid (2804 29 10)
  2. Silicon Tetra Chloride and Germanium Tetra Chloride (2812 19 20, 2812)
  3. Silica Rods (7002 20 90)
  4. Silica Tube (7002 31 00)

Applicable Rate

 

Nil

 

24

5603 94 00

Water blocking tapes for manufacture of optical fiber cable

Nil

20%

 

 

Precious Metals

 

 

25

7106

Silver dore bar, having silver content not exceeding 95%

8.5%

11%

26

7108

Gold dore bar, having gold content not exceeding 95%

9.35%

11.85%

27

71 or 98

  1. Gold (excluding ornaments studded with stones or pearls) imported by an eligible passenger as baggage
  2. Silver (excluding ornaments studded with stones or pearls)  imported by an eligible passenger as baggage

10%

12.5%

 

 

Iron and Steel, Other base metals

 

 

28

7218

Stainless steel in ingots or other primary forms; semi-finished products of stainless less

5%

7.5%

29

7224

Other alloy steel in ingots or other primary forms; semi-finished products of other alloy steel

5%

7.5%

30

7225, 

7225 19 90

 

Inputs for the  manufacture of CRGO steel:- a) MgO coated cold rolled steel coils

  1. Hot rolled coils
  2. Cold-rolled MgO coated and annealed steel
  3. Hot rolled annealed and pickled coils
  4. Cold rolled full hard

5%

2.5%

31

7226 99 30

Amorphous alloy ribbon

10%

5%

32

7229

Wire of other alloy steel (other than INVAR)

5%

7.5%

33

8105 20 10

Cobalt mattes and other intermediate products of cobalt metallurgy

5%

2.5%

 

 

Capital goods

 

 

34

8474 20 10

Stone crushing (cone type) plants for the construction of roads

Nil

7.5%

35

82, 84, 85 or 90

Capital goods used for manufacturing of following electronic items, namely-

  1. Populated PCBA
  2. Camera module of cellular mobile phones
  3. Charger/Adapter of cellular mobile phone
  4. Lithium Ion Cell
  5. Display Module
  6. Set Top Box
  7. Compact Camera Module 

Applicable rate

Nil

36

84, 85 or 90

Capital goods used for manufacturing of specified electronic items, namely-

  1. Cathode Ray tubes;
  2. CD/CD-R/DVD/DVD-R;
  3. Deflection components, CRT monitors/CTVs;
  4. Plasma Display Panel

Nil 

Applicable 

 

 

Electronics

 

 

37

8504 40

Charger/Power adapter for CCTV camera/IP camera/DVR/NVR

Nil

15%

38

85

Specified electronic items like plugs, sockets, switches, connectors,  relays.

Nil

Applicable rate

 

 

Automobile and automobile parts 

 

 

39

8421 39 20,

8421 39 90

Catalytic convertor (All goods under these tariff items other than catalytic converters will continue at 7.5%)

5%

10%

40

8702, 8704

Completely Built Unit (CBU) of vehicles falling under heading 8702, 8704

25%

30%

41

Any Chapter 

Following parts of electric vehicles: -

  1. E-Drive assembly, 
  2. On board charger, 
  3. E-compressor and
  4. Charging Gun

Applicable rate

Nil

42

87

Prescribing actual user condition in respect of existing exemption from BCD to parts of Hybrid vehicles

-

-

 

 

Oil rigs and other goods used for oil exploration

 

 

43

84 or any other chapter 

Providing option to pay BCD at transaction value on the disposal of goods, imported without payment of customs duty for petroleum operations / coal bed Methane operations where such disposal is made in unserviceable and mutilated condition

Applicable rate on

depreciated value

7.5% on transaction value

 

 

Export Promotion for Sports goods

 

 

44

39 , 4407 

Foam/EVA foam (39) and Pine Wood (4407) are being included in the list of items allowed duty free import upto 3% of FOB value of sports goods exported in the preceding financial year subject to specified conditions

Applicable rate

Nil

 

Clarifications and Miscellaneous changes regarding Basic Customs Duty

 

 

Fisheries

 

 

45

2309

Clarification is being issued that prawn feed and shrimp larvae feed, other than in pellet form will also attract 5% customs duty applicable on other fish feed in pellet form.

Proposals involving changes in export duty rates

Sl. No.

 

Export duty changes

From

To

1

41

EI tanned Leather

15%

Nil

2

41

Hides, skins and leathers, tanned and untanned, all sorts

60%

40%

Amendment in the sixth schedule to the finance act, 2018

Sl.  No.

Amendments in scheduled rate of Road and Infrastructure  Cess levied as additional duty of customs, on Petrol and Diesel [to be effective from 06.07.2019]* [Clause [201] of the Finance (No. 2) Bill, 2019] [effective rate is prescribed by notification as detailed in VII below]

Rate of Duty

 

 

From 

To

1

Motor spirit commonly known as petrol

Rs. 8 per litre

Rs 10 per litre

2

High speed diesel oil

Rs. 8 per litre

Rs 10 per litre

*  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

Sl. No.

Description

Rate of Duty

 

Change in effective rate of Road and Infrastructure Cess, levied as additional duty of customs, on Petrol and Diesel

From 

To

1

Motor spirit commonly known as petrol

Rs. 8 per litre

Rs 9 per litre

2

High speed diesel oil

Rs. 8 per litre

Rs 9 per litre

Retrospective amendments of rate notifications

Sl. No.

Amendment

Clause of the Finance (No. 2) Bill, 2019

1

  1. Notification Nos. 46/2011-Customs, dated 01.06.2011, 53/2011-Customs, dated 01.07.2011, 12/2012-Customs dated 17.03.2012 are proposed to be amended retrospectively to insert correct CTH of Stearic Acid in the notifications with effect from 31.03.2017. 
  2. Notification No. 50/2017-Customs dated 30.06.2017 is also proposed to be amended retrospectively to insert correct CTH of Stearic Acid in the notifications with effect from 01.07.2017.

[82]

 

 

 

[83]

2

Notification No. 86/2018-Customs dated 31st December, 2018 amending notification No. 296/76-Customs dated 2nd August, 1976 is proposed to be given retrospective effect so as to exempt IGST and compensation cess leviable under section 3(7) and section 3(9) of the Customs Tariff Act, 1975 respectively, on the temporary importation of vehicles under the Customs Convention on the Temporary Importation of Private Road Vehicles (carnet de passages-en-douane) for the period 1st July, 2017 to 31st December, 2018.

[84]

3

Retrospective effect, for the period 21st October, 2015 to 22nd February, 2016 to notification No. 5/2016-Customs (ADD) dated 22nd February, 2016 to insert correct classification of product under consideration for ADD namely All Fully Drawn or Fully Oriented Yarn/Spin Draw Yarn/Flat Yarn of Polyester (non-textured and non - POY) (from 5402 to 5402 47). This notification amended the notification No. 51/2015-Customs (ADD) dated 21st October, 2015.

[88]

4

Retrospective effect, for the period 8th March, 2016 to 4th July, 2016 to notification No. 29/2016-Customs (ADD) dated 5th July, 2016 to exclude ter polymer from the ambit of product under consideration for ADD on Polypropylene. This notification amended notification No. 7/2016-Customs dated 8th March, 2016.

[89]

Other miscellaneous changes

1

To rephrase the existing entry to make the intention explicitly clear that prawn feed, shrimp larvae feed in any form are entitled to concessional rate of 5% whereas fish feed in pellet form only attracts 5%

2

To include HS 8486 in the notification No. 25/1998-Customs so as to explicitly exempt from BCD all the machines used for the manufacture of semi-conductors as included in the notification

3

To include 'Headphones, earphones and combined microphone/speaker sets of Line Telephone handsets' in notification No. 25/2005-Customs dated 1st March 2005 as these items were included in the ITA agreement, by changing the description of goods against tariff sub heading 8518 30 00

4

To amend entry at S. No. 6A of the notification No. 57/2017-Customs so as to explicitly exclude microphones, receivers, speaker, connectors and SIM socket from the said entry

EXCISE

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

Sl. No.

Amendments affecting rate of Basic Excise Duty [to be effective from 06.07.2019] * [Clause [90] of the Finance (No. 2) Bill, 2019]

Rate of Duty

Sl. No.

Heading,  sub-heading tariff item

Commodity

From

To

1

2709 20 00

Petroleum Crude

Nil

Re. 1 per tonne

* 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:

Sl. No.

Heading,  sub-heading tariff item

Commodity

From

To

1

2402 20 10

Other than filter cigarettes, of length not exceeding 65 millimeters

Nil

Rs 5 per thousand

2

2402 20 20

Other than filter cigarettes, of length exceeding 65 millimeters but not exceeding 70 millimeters 

Nil

Rs. 5 per thousand

3

2402 20 30

Filter cigarettes of length (including the length of the filter, the length of filter being 11 millimeters or its actual length, whichever is more) not exceeding 65 millimeters 

Nil

Rs. 5 per thousand

4

2402 20 40

Filter cigarettes of length (including the length of the filter, the length of filter being 11 millimeters or its actual length, whichever is more) exceeding 65 millimeters but not exceeding 70 millimeters 

Nil

Rs. 5 per thousand

5

2402 20 50

Filter cigarettes of length (including the length of the filter, the length of filter being 11 millimeters or its actual length, whichever is more) exceeding 70 millimeters but not exceeding 75 millimeters

Nil

Rs. 5 per thousand

6

2402 20 90

Other (Cigarettes containing tobacco)

Nil

Rs. 10 per thousand

7

2402 90 10

Cigarettes of tobacco substitutes 

Nil

Rs. 5 per thousand

8

2403 11 10

Hookah or gudaku tobacco

Nil

0.5%

9

2403 19 10

Smoking mixtures for pipes and cigarettes

Nil

1%

10

2403 19 21

Other than paper rolled biris, manufactured without the aid of machine

Nil

5 paisa per thousand

11

2403 19 29

Other (Biris)

Nil

10 paisa per thousand

12

2403 19 90

Other smoking tobacco

Nil

0.5%

13

2403 91 00

'Homogenised' or 'reconstituted' tobacco

Nil

0.5%

14

2403 99 10

Chewing tobacco

Nil

0.5%

15

2403 99 20

Preparations containing chewing tobacco

Nil

0.5%

16

2403 99 30

Jarda scented tobacco

Nil

0.5%

17

2403 99 40

Snuff

Nil

0.5%

18

2403 99 50

Preparations containing snuff

Nil

0.5%

19

2403 99 60

Tobacco extracts and essence

Nil

0.5%

20

2403 99 90

Other (manufactured tobacco and substitutes)

Nil

0.5%

21

2709 20 00

Crude Petroleum oil produced in specified oil fields under production sharing contracts or in the exploration blocks offered under the New Exploration Licensing Policy (NELP) through international competitive bidding

Re. 1 per tonne

Nil

Amendment in the eighth schedule to the Finance Act, 2002:

Sl. No.

Amendments in scheduled rate of Special Additional Excise Duty on Petrol and Diesel [to be effective from 06.07.2019]* [Clause [185] of the Finance (No. 2) Bill, 2019][effective rate is prescribed by notification as detailed in V-A below]

Rate of Duty

 

 

From 

To

1

Motor spirit commonly known as petrol

Rs. 7 per litre

Rs 10 per litre

2

High speed diesel oil

Rs. 1 per litre

Rs 4 per litre

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

Amendment in the sixth schedule to the Finance Act, 2018:

Sl.  No.

Amendments in scheduled rate of Road and Infrastructure cess levied as additional duty of excise, on Petrol and Diesel [to be effective from 06.07.2019]* [Clause [201] of the Finance (No. 2) Bill, 2019] [effective rate is prescribed by notification as detailed in V-B below]

Rate of Duty

 

 

From 

To

1

Motor spirit commonly known as petrol

Rs. 8 per litre

Rs. 10 per litre

2

High speed diesel oil

Rs. 8 per litre

Rs. 10 per litre

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

Effective change in rate of Special Additional Excise Duty and Road and Infrastructure Cess on Petrol and Diesel

Sl. No.

Description

Rate of Duty

A

Increase in effective rate of Special Additional Excise Duty on Petrol and Diesel

From 

To

1

Motor spirit commonly known as petrol

Rs. 7 per litre

Rs. 8 per litre

2

High speed diesel oil

Rs. 1 per litre

Rs. 2 per litre

B

Increase in effective rate of Road and Infrastructure Cess, levied as additional duty of excise, on Petrol and Diesel

From 

To

1

Motor spirit commonly known as petrol

Rs. 8 per litre

Rs. 9 per litre

2

High speed diesel oil

Rs. 8 per litre

Rs. 9 per litre

Service tax

Retrospective exemption from service tax on service by way of grant of liquor licence

Any service provided by the Government was liable to tax under reverse charge in the hands of the recipient of service. On the same analogy, service by way of grant of liquor licence against consideration in the form of licence fee or application fee was also covered under the tax net. However, now vide Finance Act, 2019 the Government has proposed to provide retrospective exemption on the licence fee or application fee collected by the state government for granting liquor licence. Since the taxability in this head was made operational with effect from 1 April 2016 owing to deletion of word 'support services' from the negative list, therefore the present exemption is been given retrospectively from such date.

Further specific provision is made for enabling refund in all cases where the service tax on this account has been collected by the Government, provided that the time limit to applying for refund is 'six months from date of president assent to Finance Bill 2019.'

H&A comments:-

This is was a widespread area of dispute from the time of its institution. Writ Petition was filed in the case of by M/s. Jagatjit Industries in the Hon'ble High Court of Delhi challenging levy of service tax on license fee paid for liquor license. One of the prime argument was that levying of service tax on liquor licence was encroachment into the state subject. The issue was also discussed in the 26th GST Council Meeting held on 10.03.2018 [Agenda item 14(iv)] and it was decided that GST/Service Tax was not leviable on license fee and application fee by whatever name called for alcoholic liquor for human consumption. However, there was no solace from the field officers. Now the specific entry in the Finance bill 2019 should put the matter to rest.

Liquor Industry is highly regulated by the State, saddled with high Excise Duties, complicated manufacturing process expecting the same relief in the GST regime also. The GST Council in the above meeting has already taken the policy decision not to levy the GST on liquor license fee. Therefore the Industry is awaiting for suitable notification/ clarification.

The above service tax exemption has tremendous ramifications on other fees/royalties paid to Government. This notification will be weapon to challenge the levy of service on royalty payments in the case of mining as issuance of exemption notification cannot be presumed that license fees is taxable. Anyhow some relief, big relief to liquor industry.       

(Clause 116 to the Finance Bill 2019 – Retrospectively w.e.f 01.04.2016)

on services provided by IIM to students

Two year's full time PG programme admissions for which are made based on CAT, fellow programme and Five year integrated programme in management provided by IIM to students as per the guidelines of central government as an educational programme have now been exempted retrospectively from the levy of service tax w.e.f 1stJuly, 2003 and ending with 31st March, 2016 (both days inclusive).

Further, it is provided that 'Refund shall be granted of all such service tax which has been collected'. Time limit of 'six months from date of president assent to Finance Bill 2019 has been provided for making an application for refund.

H&A comments:-

This has been a long standing area of dispute since the time service tax was levied on 'commercial training and coaching services w.e.f 1st July 2003. Since the courses provided by IIM's were not covered under the recognized qualification under any law as IIM's were not covered under the purview of University Grants Commission. Hence it was argued by the department that services provided by IIM's do not get covered within the existing entry of exemption which was restricted only to the courses that are part of the curriculum for obtaining a qualification recognized by any law. It was only in 2016 vide Notification No. 9/2016-ST that the services provided by the IIM's for specific programmes were exempted from the levy of service tax. This retrospective exemption should put the disputes on this matter to rest.

(Clause 117 to the Finance Bill 2019 – Retrospectively w.e.f 01.04.2003)

on long term lease of plots for development of infrastructure for financial business

Upfront amount charged towards premium, salami, cost, price, development charges or by any other name, payable in respect of service by way of granting long term lease of thirty years or more of plots for development of infrastructure for financial business provided by State Government Industrial Development Corporations or Undertakings or by any other entity having 50% or more of the ownership of the CG or SG or the Union territory, either directly or through an entity which is wholly owned by the CG or SGor the Union territory, to the developers in any industrial or financial business areafor period '1 October 2013 to 30 June 2017' has been exempted retrospectively.

Further specific provision for application of refund where service tax earlier paid. Time limit to apply refund 'six months from date of president assent to Finance Bill 2019.'

H&A comments:-

Earlier Notification No. 41/2016-ST was issued in the Service Tax regime providing exemption for 'grant of long-term lease of industrial plots' by State Government industrial development corporations /undertakings to industrial units, retrospectively from 2007 when the services of renting of immovable property became taxable. Since the earlier exemption was restrictive to the long term lease of only industrial plots, the present retrospective exemption is an extension to the same providing for the similar exemption on the retrospective basis to 'developers in any industrial or financial business area'. Even under GST vide Notification No. 12/2017-CTR 'Upfront amount paid for long term lease of industrial plots for development of infrastructure for financial business provided by State Government Industrial Development Corporations is exempt.

The exemption has been expended to service provided by any other entity having fifty per cent. or more of the ownership of the Central Government or the State Government or the Union territory, either directly or through an entity which is wholly owned by the Central Government or the State Government or the Union territory. Earlier this exemption was restricted to State Government Industrial Development Corporations.

(Clause 118 to the Finance Bill 2019 – Retrospectively w.e.f 01.10.2013)

Clarification on reversal requirement of credit in service tax for all services covered by abatement under Notification No. 26/2012-ST

Abatement was provided under service tax on various services vide Notification No. 26/2012-ST, which mainly exempted the taxable serviceas in excess of the certain percentage and only on the percentage of taxable value, service provider had to pay service tax. The abatement in the notification also provided for various conditions 'restricting availing CENVAT credit on input/input services/capital goods' different for each service. Rule 6(3) of the CCR provides for payment of 7% of value exempted, where 'part of the value of a taxable service has been exempted on the condition that no CENVAT credit of inputs and input services'. There was an issue whether the reduction in value by virtue of an abatement constitutes 'exemption' requiring the reversal of CENVAT Credit. This has been recently clarified vide Circular No. 213/3/2019-ST, stating that payment under rule 6(3) is required only when exemption is provided with condition of restriction on both input and also input service.

H&A comments:-

Below are the various services on which abatement was given subject to a restriction of credits on both inputs and input services and thereby based on this circular, it would attract reversal of CENVAT Credit under rule 6(3) of the CENVAT Credit Rules. Specific services such as:-

Services of goods transport agency in relation to transportation of goods.

Services of goods transport agency in relation to transportation of used household goods.

Transport of passengers, with or without accompanied belongings, by a contract carriage other than motorcab.

Services provided by a foreman of chit fund in relation to chit

Services by a tour operator in relation to tour

Transport of passengers, with or without accompanied belongings, by air, embarking from or terminating in a Regional Connectivity Scheme Airport.

However, there many other servicesspecific services such as 'Bundled service by way of supply of food and renting at a premise', 'renting for residential/lodging', 'construction services' etc.where the CENVAT credit on both inputs and input services was not restricted and thus it would not require reversal of CENVAT Credit because it has a reduced effective rate of tax on the basis of abatement in the value. This issue has already been held in favour of assessee judicially also.

Clarification on reversal requirement under rule 6(3) of CCR for restaurants or outdoor catering

In case of service provided by way of supply of food/drink in a restaurant or as outdoor catering, the Service Tax (Determination of Value) Rules, 2006 provided for a certain deemed percentage on basis of which the total amount charges for such a supply shall be considered a taxable value based on which service tax was payable. Further explanation 2 provides for the above 'provider of taxable service shall not take CENVAT credit of duties or cess paid on any goods classifiable under Chapters 1 to 22 of the Central Excise Tariff Act, 1985'.There was an issue whether the reduction in value by virtue of valuation rules would require the reversal of CENVAT Credit. This has been recently clarified vide Circular No. 213/3/2019-ST, stating that payment under rule 6(3) is not required and only the compliance of condition under rule 2C of the valuation rules would be sufficient.

H&A comments:

CENVAT Credit Rules required reversal of credit when the service provider has both taxable and exempt services. The valuation mechanism provided is under section 67 of Finance Act being 'Valuation of taxable services for charging service tax' and not under section 93 being 'Power to grant exemption from service tax'. Though the valuation for payment of service tax for restaurants or outdoor catering is different but same is not by virtue of an exemption and therefore the same cannot be considered as exempt for purpose of rule 6(3) also.

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Madhukar N Hiregange 
on 08 July 2019
Published in GST
Views : 2712

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