CGST Act Amendments | Key Highlights of the Finance Act 2023

Table of Contents

1. Amendment to section 10(2)(d) and 10(2A)(c) of CGST Act, 2017 (Effective from a date yet to be notified)
2. Amendment to Second and Third proviso to section 16(2) of CGST Act, 2017 (Effective from a date yet to be notified)
3. Amendment to section 17(3) of CGST Act, 2017 (Effective from a date yet to be notified)
4. Amendment to section 17(5) of CGST Act, 2017 (Effective from a date yet to be notified)
5. Amendment to section 23 of CGST Act, 2017 (Effective from a date yet to be notified)
6. Amendment to section 30 of CGST Act, 2017 (Effective from a date yet to be notified)
7. Amendment to sections 37, 39, 44 and 52 of CGST Act, 2017 (Effective from a date yet to be notified)
8. Amendment to section 54 (Effective from a date yet to be notified)
9. Amendment to section 56 (Effective from a date yet to be notified)
10. Amendment to section 62 (Effective from a date yet to be Notified)
11. Substitution/Amendment to sections 109, 110, 114, 117, 118 and 119 of CGST Act, 2017 (Effective from a date yet to be notified)
12. Insertion of section 122(1B) of CGST Act, 2017 (Effective from a date yet to be notified)

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1. Amendment to section 10(2)(d) and 10(2A)(c) of CGST Act, 2017 (Effective from a date yet to be notified)

Presently a registered person who has opted for composition scheme cannot supply goods or services through an electronic commerce operator who is required to collect tax at source under section 52.

By way of proposed amendment, restriction of supplying goods through an electronic commerce operator who is required to collect tax at source under section 52 is sought to be removed and now registered persons who have opted for composition scheme will be allowed to supply goods through such electronic commerce operator.

2. Amendment to Second and Third proviso to section 16(2) of CGST Act, 2017 (Effective from a date yet to be notified)

Presently an amount equal to the input tax credit availed by the recipient is added to his output tax liability along with interest thereon in cases wherein he fails to pay to the supplier of goods or services or both, the amount towards the value of supply along with tax payable thereon within a period of one hundred and eighty days from the date of issue of invoice by the supplier. Further, subsequent to the reversal, recipient is entitled to avail of the credit of input tax on payment made by him of the amount towards the value of supply of goods or services or both along with tax payable thereon.

By way of proposed amendment, on non-payment to the supplier within 180 days, input tax credit shall not be added to the output tax liability of the recipient but such input tax credit shall be required to be reversed along with interest under section 50 of CGST Act, 2017. Further now third proviso to section 16(2) specifically requires that recipient shall make payment towards the value of supply of goods or services or both to the supplier along with tax payable thereon for being entitled to avail of the credit of such input tax. Both these amendments align the said sub-section with the return filing system provided in the Act.

3. Amendment to section 17(3) of CGST Act, 2017 (Effective from a date yet to be notified)

Presently, value of exempt supply under sub-section (2) of Section 17 for reversal under Rules 42 and 43 shall be such as may be prescribed and includes supplies on which the recipient is liable to pay tax on reverse charge basis, transactions in securities, sale of land and, subject to clause (b) of paragraph 5 of Schedule II, sale of building.

Now with the proposed amendment, such value shall also include value in respect of supply covered by clause (a) of paragraph 8 of the Schedule III of CGST Act, 2017. The said entry pertains to Supply of warehoused goods to any person before clearance for home consumption. This amendment seeks to restrict availment of input tax credit in respect of certain transactions specified in clause (a) of paragraph 8 of Schedule III of the said Act, as may be provided by rules, by including the value of such transactions in the value of exempt supply.

4. Amendment to section 17(5) of CGST Act, 2017 (Effective from a date yet to be notified)

Amendment in Blocked credit is proposed to include goods or services or both received by a taxable person, which are used or intended to be used for activities relating to his obligations under corporate social responsibility referred to in section 135 of the Companies Act, 2013.

5. Amendment to section 23 of CGST Act, 2017 (Effective from a date yet to be notified)

Presently Section 24 overrides provision of Section 22(1) of CGST Act, 2017. Section 23 of CGST Act, 2017 provides for person not liable to be registered but provisions of Section 23 neither overrides sections 22(1) and 24 nor sections 22(1) and 24 overrides provisions of section 23.

This anomaly is sought to be removed with Section 23 now proposed to have overriding impact over sections 22(1) and 24 of CGST Act, 2017. This is a retrospective amendment with effect from the 1st day of July, 2017 to provide that section 23 of the Central Goods and Services Tax Act relating to persons not liable for registration has an overriding effect to the said section over sub-section (1) of section 22 and section 24 of the said Act.

6. Amendment to section 30 of CGST Act, 2017 (Effective from a date yet to be notified)

Presently any registered person, whose registration is cancelled by the proper officer on his own motion, he may apply to such officer for revocation of cancellation of the registration in the prescribed manner within thirty days from the date of service of the cancellation order.

The section has been amended so as to remove the time limit provided in the Statute and provide that the application for revocation of cancellation of registration shall be filed in such manner, within such time and subject to such conditions and restrictions, as may be prescribed. Therefore, CGST Rules will now prescribe the manner, time and conditions and restrictions for filing the application for revocation of cancellation of registration.

The Proviso which provided that the period of thirty days may on sufficient cause being shown, and for reasons to be recorded in writing, be extended by the Additional Commissioner or the Joint Commissioner or by the Commissioner has been omitted.

7. Amendment to sections 37, 39, 44 and 52 of CGST Act, 2017 (Effective from a date yet to be notified)

It is proposed to insert a restriction on filing of statement/return after the expiry of period of three years from the due date of furnishing of the said details/return.

The amendments to the respective provisions provide that :

(a) a registered person shall not be allowed to furnish the details of outward supplies under sub-section (1) of section 37 for a tax period after the expiry of a period of three years from the due date of furnishing the said details (GSTR-1). It further seeks to empower the Government, on the recommendation of the Council, to extend by notification, the said time limit for a registered person or a class of registered persons, subject to certain conditions and restrictions.

(b) a registered person shall not be allowed to furnish a return for a tax period after the expiry of a period of three years from the due date of furnishing the said return (GSTR-3B/4/5/6/7). It further seeks to empower the Government, on the recommendation of the council, to extend by notification, the said time limit for a registered person or a class of registered persons, subject to certain conditions and restrictions.

(c) a registered person shall not be allowed to furnish an annual return under sub-section (1) for a financial year after the expiry of a period of three years from the due date of furnishing the said annual return (GSTR-9/9A). It further seeks to empower the Government, on the recommendation of the Council, to extend by notification, the said time limit for a registered person or a class of registered persons, subject to certain conditions and restrictions.

(d) operator shall not be allowed to furnish a statement under sub-section (4) after the expiry of a period of three years from the due date of furnishing the said statement (GSTR-8). It further seeks to empower the Government, on the recommendation of the Council, to extend by notification, the said time limit for an operator or a class of operators, subject to certain conditions and restrictions.

8. Amendment to section 54 (Effective from a date yet to be notified)

Presently, provision of Section 54(4) of CGST Act, 2017 provides for refund on a provisional basis of ninety per cent of the total amount so claimed, excluding the amount of input tax credit provisionally accepted.

Since the provision of Provisional credit under section 41 has already been done away with therefore as a consequential amendment, reference of provisional credit is sought to be removed from the provision of the Section. Thus, this amendment aligns the provision with the present scheme of availment of self-assessed input tax credit as per sub-section (1) of section 41 of the said Act.

9. Amendment to section 56 (Effective from a date yet to be notified)

Presently, provision of Section 56 provides that if any tax ordered to be refunded under sub-section (5) of section 54 to any applicant is not refunded within sixty days from the date of receipt of application under sub-section (1) of that section, interest shall be payable in respect of such refund from the date immediately after the expiry of sixty days from the date of receipt of application under the said sub-section till the date of refund of such tax.

The provision is proposed to be amended to the extent it requires that interest shall be payable in respect of such refund from the date immediately after the expiry of sixty days from the date of receipt of application under the said sub-section till the date of refund of such tax. Now it is proposed to that interest to be paid for the period of delay beyond sixty days from the date of receipt of such application till the date of refund of such tax shall be computed in such manner and subject to such conditions and restrictions as may be prescribed. Therefore, the rules will now provide the manner and conditions and restrictions subject to which the interest shall be computed.

10. Amendment to section 62 (Effective from a date yet to be Notified)

Presently, where the registered person furnishes a valid return within thirty days of the service of the assessment order under section 62, the order passed earlier under section 62 is deemed to have been withdrawn.

The present time limit of thirty days is sought to be extended to sixty days. Further, where the registered person fails to furnish a valid return within sixty days of the service of the assessment order under sub-section (1), he will be allowed to furnish the same within a further period of sixty days on payment of an additional late fee of one hundred rupees for each day of delay beyond sixty days of the service of the said assessment order.

In cases, wherein he furnishes a valid return within such extended period, the said assessment order shall be deemed to have been withdrawn, but the liability to pay interest under sub-section (1) of section 50 or to pay late fee under section 47 shall continue.

11. Substitution/Amendment to sections 109, 110, 114, 117, 118 and 119 of CGST Act, 2017 (Effective from a date yet to be notified)

The following provision relating to establishment of GST Tribunals have been sought to be substituted/amended by Finance Act, 2023.

12. Insertion of section 122(1B) of CGST Act, 2017 (Effective from a date yet to be notified)

Section 122(1B) is sought to be inserted to provide that any electronic commerce operator who :

(i) allows a supply of goods or services or both through it by an unregistered person other than a person exempted from registration by a notification issued under this Act to make such supply;

(ii) allows an inter-State supply of goods or services or both through it by a person who is not eligible to make such inter-State supply; or

(iii) fails to furnish the correct details in the statement to be furnished under sub-section (4) of section 52 of any outward supply of goods effected through it by a person exempted from obtaining registration under this Act,

shall be liable to pay a penalty of ten thousand rupees, or an amount equivalent to the amount of tax involved had such supply been made by a registered person other than a person paying tax under section 10, whichever is higher.

Thus, the proposed amendment seeks to provide for penal provisions applicable to electronic commerce operators in case of contravention of provisions relating to supplies of goods or services made through them by unregistered persons or composition taxpayers.