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6th July 2019

Key Changes in GST and Service Tax vide Finance (No. 2) Bill, 2019

Hon'ble Finance Minister Smt. Nirmala Sitharaman presented Union Budget for Financial Year 2019-20 on 5th July 2019. In the Budget speech, Hon'ble Finance Minister proposed a few significant changes under GST and Service Tax.

The amendments proposed under Service Tax vide the Union Budget have been divided in 2 categories on the basis of applicability date. Below is a gist of the same:-

1. Changes applicable w.e.f. date to be notified after enactment of Finance (No. 2) Bill, 2019 

  • In Section 10 of the CGST Act, to provide alternative composition scheme for supplier of services or mixed suppliers (not eligible for the earlier composition scheme) having an annual turnover in preceding financial year upto rupees fifty lakhs.
  • In Section 22 of the CGST Act, to provide for higher threshold exemption limit from Rs. 20 lakhs to such amount not exceeding Rs. 40 lakhs in case of supplier who is engaged exclusively in the supply of goods.
  • In Section 25 of the CGST Act so as to provide for mandatory Aadhaar submission or authentication for persons who intend to take or have taken registration under the said Act in such manner as may be notified by the Government on the recommendations of the Council.
  • A new section 31A is proposed to be inserted in the CGST Act, to provide that supplier shall mandatorily offer facility for digital payments to his recipient.
  • In Section 39 of the CGST Act so as to provide for furnishing of annual returns and for quarterly payment of tax by taxpayer who opts for composition levy and to provide for certain other category of tax payers, an option for quarterly and monthly payments under the proposed new return filing system.
  • Section 44 of the CGST Act has been proposed to be amended to grant power to the Commissioner to extend the due date for furnishing Annual return and reconciliation statement.
  • In Section 49 of the CGST Act in order to provide facility to the taxpayer to transfer an amount from one head to another in the electronic cash ledger.
  • In Section 50 of the CGST Act, to charge interest only on the net cash tax liability, except in those cases where tax is paid subsequent to initiation of any proceedings under section 73 or 74 of the Act.
  • In Section 52 of the CGST Act, to grant power to the Commissioner to extend the due date for furnishing of monthly and annual statement by the person collecting tax at source.
  • A new section 53A to provide for transfer of amount in the electronic cash ledger between the Centre and States as a consequence of the new facility given to the tax payer under section 49.
  • A new sub-section (8A) has been proposed to be inserted in Section 54 to empower the Central Government to disburse refund amount to the taxpayers in respect of refund of State taxes.
  • The National Appellate Authority for Advance Ruling: Following significant provisions have been proposed to be amended/inserted in CGST Act, in respect of Appeal to National Appellate Authority for Advance Ruling:
    • Section 95 to include "the National Appellate Authority for Advance Ruling" in the definition of "advance ruling". It also seeks to insert clause (f) in section 95 of the Central Goods and Services Tax Act to define "National Appellate Authority".
    • The proposed new section 101A seeks to provide for constitution of the National Appellate Authority for Advance Ruling. It also provides for qualification, appointment, tenure, conditions of services and manner of removal of the President and Members of the National Appellate Authority.
    • The proposed new section 101B seeks to provide for filing of appeals and the procedure 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 or both under sub-section (1) of section 101 or subsection (3) of section 101 of the Act.
    • The proposed new section 101C seeks to provide that the National Appellate Authority shall pass order within a period of ninety days from the date of filing of the appeal. It also provides that where the members differ on any point, it shall be decided by majority.
    • Section 103 to provide that the advance ruling pronounced by the National Appellate Authority shall be binding on the applicants, being distinct persons and all registered persons having the same PAN and on the concerned officers or the jurisdictional officers in respect of the said applicants and the registered persons having the same PAN. It also provides that the ruling shall be binding unless there is a change in law or facts.
  • A new sub-section (2A) has been proposed to be inserted in section 171 to empower the Authority specified under sub-section (2) thereof to impose penalty equivalent to ten per cent of the profiteered amount. No penalty where amount deposited with in 30 days of the passing of the order.
  • Proposal for Sabka Viswas (Legacy Dispute Resolution) Scheme, 2019 The Scheme is a one time measure for liquidation of past disputes of Central Excise and Service Tax as well as to ensure disclosure of unpaid taxes by a person eligible to make a declaration. The Scheme shall be enforced by the Central Government from a date to be notified. It provides that eligible persons shall declare the tax dues and pay the same in accordance with the provisions of the Scheme. It further provides for certain immunities including penalty and any other proceedings under the Central Excise Act, 1944 or Chapter V of the Finance Act, 1944 to those persons who pay the declared tax dues.
2. Changes applicable w.e.f. the date of enactment of Finance (No. 2) Bill, 2019
Changes w.r.t. GST
Retrospective exemption is proposed from "Uranium Ore Concentrate" from the levy of central tax from 1st July, 2017.
Changes w.r.t. Service Tax
Retrospective exemption from service tax is proposed on following services during the period from the 1st day of April, 2016 up to 30th day of June, 2017:
  • Services by way of grant of liquor licence by the State Government;
  • Long duration degree or diploma programmes except Executive Development Programme provided by the Indian Institutes of Management to the students;
  • On upfront amount paid for services by way of grant of long term lease of plots for development of infrastructure for financial business by the State Government Industrial Development Corporations or Undertakings or by any other entity having fifty per cent. or more ownership of the Central Government or State Government or Union territory, directly or through an entity which is wholly owned by such Governments, to the developers in the industrial or financial business area.