GST Amendments

  1. Entities not registered under GST are liable to pay tax on Import of services 

As per the amended Schedule I of the CGST Act, 2017, in instances where an unregistered person imports services (under the purview of GST) in the course or furtherance of business from a related person or an or any of their other establishments outside India. Such person is now liable to register and pay taxes on such import of services

  1. Merchant trade transactions, high sea sales and supply of warehoused goods before clearance for home consumptions not to be treated as supplies 

Schedule III (Activities or transactions which shall be treated neither as a supply of goods nor a supply of services) of the CGST Act, is amended to include the following – 

“7. Supply of goods from a place in the non-taxable territory to another place in the non-taxable territory without such     goods entering into India. 

  1. (a) Supply of warehoused goods to any person before clearance for home consumption; 

    (b) Supply of goods by the consignee to any other person, by endorsement of documents of title to the goods, after the goods have been dispatched from the port of origin located outside India but before clearance for home


Explanation: For the purposes of above paragraph 8, the expression “warehoused goods” shall have the same meaning as assigned to it in the Customs Act, 1962.” 

SBC Comments – 

  • This amendment covers three transactions: 
  1. Merchant Trade transactions (Supply of goods from one non-taxable territory to another)
  2. High Sea Sales (Sale of goods after dispatch from port of origin but before clearance for home consumption)
  3. Supply of warehoused goods before clearance for home consumption 
  • Earlier, these transactions were covered in the definition of supply. However, they were not leviable to tax under the IGST Act which requires the chargeability only as per the Customs law. So, they were considered as Non-GST supply
  • These resulted in reversal of input tax credit as the outward supply was considered as exempt in nature (exempt covers Non-GST supply) 
  • After this amendment, these transactions will not be treated as supplies altogether as they now form part of Schedule III. Further, reversal of input tax credit will not be required against such transactions either. 


  1. Restrictive applicability of Section 9 (4) 
  • Section 9(4) which deals with payment of tax on reverse charge basis by a registered person upon receipt of supply from unregistered persons is now under suspension 
  • It has been proposed that the government will notify certain class of registered person who shall be liable to pay tax on reverse charge basis in case of receipt of goods from an unregistered person. 
  • This has curtailed the applicability of this section on all registered taxpayers. Only a notified class of registered taxpayers are purported to be covered by this substituted section now. 


  1. Increase in composition threshold limit and allowance of provision of services for composition dealers 
  • It has been specified that the tax payable under composition scheme will only be lieu of tax leviable under normal charge/forward charge. 
  • The turnover limit has been raised from Rs 1 Crore to Rs 1.5 Crore so as to facilitate trade practices 
  • Any reverse charge tax liability upon composition dealers will continue as applicable to a normal taxpayer. 
  • At present, traders and manufacturers engaged in supply of services are not eligible for composition scheme even if a small proportion of their supplies relate to services. 
  • A new proviso has been inserted which allows registered person engaged in supply of services (other than restaurant services) to opt for composition scheme subject to a threshold limit. 
  • The registered person shall be eligible for composition only if they supply services of value not exceeding 10% of their turnover in the preceding financial year in a State/ Union Territory or Rs 5 lakhs, whichever is higher. 


  1. Rationalization of time of supply provisions for goods and services 
  • Section 31(1) and (2) mentions about the last date of invoice under generic situations in cases of goods and services respectively. 
  • Other subsections of Section 31 depict the last date of issue of invoice in cases of continuous supply of goods and services, cessation of supply of services before the completion of supply and goods taken on approval for sale or return basis 
  • The provisions of time of supply which considers the last date of issue of invoice only refers to two sub-sections (1) and (2) of section 31. No reference is drawn under the time of supply in special circumstances given under the other sub-sections. 
  • To rationalize and correct this anomaly, the reference to the particular subsections are removed so that the entire Section 31 may be covered within the ambit of time of supply. 


  1. ITC on services provided to any person on direction of / on account of another person 
  • To avail ITC the registered person must be in receipt of goods or services 
  • In Bill-to-ship-to model, it is deemed that goods are received when the supplier delivers the goods to any other person on direction of the recipient 
  • This deemed assumption shall now be applicable in case of services as well. 
  • So, ITC will be allowed to a person on whose direction and account, the third person receives the services


  1. Entitlement of ITC upon payment by the supplier subject to the new return filing procedure



  • One of the conditions for availing input tax credit is that the payment of tax should have been made by the supplier 
  • The new return filing mechanism may allow taking of input tax credit to the recipient in certain situations and subject to certain conditions even if the payment of tax is not made by the supplier 
  • So, this condition of requirement of payment of tax by the supplier has been made subject to the procedure in the new return filing mechanism 


  1. ITC availability on Schedule III items. 
  • The new provision has been inserted so as to allow ITC on activities mentioned in Schedule III (other than sale of land and subject to clause(b) of paragraph 5 of Schedule II, sale of building) by removing it from the ambit of exempt supplies. Hence, these clauses will not entail any reversal of credit. 
  • Excluding of supplies covered under Schedule III from the scope of exempt supplies under Section 17(3) will result in lower reversal of credit particularly in case of high sea sales, merchant trade transactions and supply of warehoused goods before clearance for home consumption. 


  1. Expansion of Scope of availability of ITC on motor vehicles 
  • The amendment is bought to expand the scope of availability of ITC on motor vehicles having approved capacity of not more than 13 persons (including the drivers) if used for specified purposes. 
  • ITC shall be available in respect of dumpers, work-trucks, fork-lift trucks. 
  • ITC shall not be available in respect of motor vehicles having capacity of not more than 13 persons (including the drivers), vessels and aircrafts if they are used for personal purpose. 
  • A new provision has been inserted allowing ITC on motor vehicles if they are used for transportation of money for or by banking company and financial institutions. 
  • ITC in respect of services of general insurance, servicing, repair and maintenance in respect of those motor vehicles, vessels and aircraft on which ITC is not available under clause (a) or (aa) 
  • Unrestricted ITC is allowed in respect of vehicles for transportation of goods 
  • ITC cannot be taken in respect of motor vehicles for transportation of persons even if used for transportation of goods 
  • In respect of vessels and aircrafts, ITC will be blocked except if it is used for certain specified purposes 
  • When used for an insurance company for supply of insurance services, Input tax credit will be available in respect of motor vehicles, vessels or aircraft insured by him. 
  • For all other conveyances, Input tax credit will be freely available (e.g. motor vehicles for transportation of persons > 13 persons). 


  1. Expansion of Scope of ITC for Section 17(5) clause(b) 
  • The provisions have been amended so as to allow ITC in respect of goods or services or both if it is made obligatory for an employer to provide such services under any law for the time being in force. 
  • ITC has been enabled on food and beverages, outdoor catering, beauty treatment, heath services etc. if required to be provided by the employer through any obligation imposed under any law 
  • Renting or hiring of motor vehicles, vessels and aircraft are blocked only if the purchase of such motor vehicles, vehicles and aircrafts are blocked as per clause (a) of (aa) 


  1. Threshold exemption limit for registration increased for certain states 
  • The aggregate turnover limit for certain states has been increased from Rs 10 lakhs to Rs 20 lakhs. 
  • The power has been provided under the law to increase the threshold limit for registration for certain special category states on their request from Rs. 10 lakhs to Rs. 20 lakhs. 
  • Arunachal Pradesh, Assam, Himachal Pradesh, Meghalaya, Sikkim and Uttarakhand has been excluded from the definition of special category states. 


  1. Issue of consolidated credit note/debit note in a financial year. 
  • Suppliers are now not required to link credit notes/debit notes with individual invoices. 
  • The supplier may now issue a consolidated credit note/debit notes in respect of multiple invoices issued in the financial year. 


  1. Empowerment of time limit and periodicity for filing of return through rules 
  • Earlier the provisions of the Act required a person to file their GSTR 3/3B by 20th of the next month. So, even though the government wished to make this return quarterly for a select group of taxpayers, it could not circumvent the provisions of the Act 
  • Through this amendment, the periodicity and time for filing of this return is now allowed to be prescribed through the rules 
  • Further, an enabling proviso has been inserted to allow the Government to notify certain category of taxpayers who will be allowed to file this return on a quarterly basis. 


  1. Correction of mistake through an alternate mechanism including amendment return 
  • Earlier, any mistake or omission could be corrected through the return of the month in which the mistake/omission is noticed 
  • Now, the process of correction of such mistakes will be notified through the rules. 
  • It is proposed to introduce amendment return as per the new return filing mechanism for correction of past mistakes. 
  • So, the complete mechanism for correction may be notified through the rules 


  1. Procedure for furnishing return and availing ITC in the new return filing mechanism 
  • The new provision for furnishing of return and availing of input tax credit has been inserted in respect of the new return filing mechanism 
  • The registered recipient is required to verify, validate, modify or delete the details of supplies furnished by the suppliers 
  • Overriding the entire process of matching currently, the procedure for availment of ITC by the recipient will its verification will be prescribed through the rules. 
  • Procedure for declaration of outward supplies will also be prescribed therein. 
  • Where the outward supplies are not furnished by the supplier, the maximum amount of ITC will be given through the procedure. This will not exceed 20% of the ITC available in any situation 
  • The tax on details of outward supplies declared by the supplier will be deemed to be payable by the supplier. 
  • The supplier and recipient have been made jointly and severally liable to pay tax for details furnished/not furnished by the supplier in respect of which the return has not been furnished 
  • The procedure of recovery of this amount may be prescribed through the rules. 
  • The procedure, safeguards and threshold of the tax amount in relation to outward supplies for the supplier can be prescribed separately for a registered person: 
  • Within six months of taking registration. 
  • who has defaulted in payment of tax and the default of which continues for more than 2 months from the due date of payment of the default. 


  1. Utilization of IGST first against payment of any tax 
  • The new process of utilization requires the utilization of IGST first against payment of any output tax liability in the form of CGST/SGST/UTGST/IGST. 
  • The balance of CGST/SGST/UTGST can be used only when the balance of IGST is exhausted. 
  • This proviso has been inserted to minimise fund settlement on account of IGST. 
  • This has been amended to restrict the utilisation of SGST/UTGST credit available against payment of IGST only when the balance in CGST credit is not available for payment of IGST. 


  1. Modification of relevant date in case of refund of unutilised credit 
  • As per this amendment the relevant date for calculation of time period for refund of unutilised ITC shall henceforth be the due date for furnishing the return under section 39 for the period in which the claim arises 
  • This amendment has been bought to remove the contradiction involved between section 54(3) and explanation 2(e) of Section 54 which used to earlier provide two different time periods for calculation of relevant date 


  1. Unjust enrichment applicable in case of refund on supplies to SEZ developer/unit 
  • Section 54 (8) provides a list of situations where the principle of unjust enrichment does not apply for the purposes of payment of refund. One such situation is zero-rated supplies of goods or services. 
  • Zero-rated supply under section 16 (1) of the IGST Act includes physical exports of goods or services and supplies made to an SEZ unit/SEZ developer and the principle of unjust enrichment does not apply in such cases. 
  • Presently, under section 16 (3) of the IGST Act, only the supplier making supplies of goods or services to an SEZ unit/SEZ developer can claim refund. 
  • It is proposed to allow ITC to the SEZ developer or SEZ unit and the supplier in DTA may recover the tax amount from such SEZ unit, etc. 
  • So, section 54(8) was amended in order to provide that the principle of unjust enrichment will apply in case of refund claim arising out of supplies of goods or services made to SEZ developer/unit. 
  • So, if the burden is passed to the SEZ developer/unit, the refund will be provided to the SEZ developer/unit and not the DTA. 


  1. Relevant date for Export of services to include cases where payment received in INR if permitted by RBI 
  • There is a requirement for receipt in foreign exchange in case of export of services. 
  • In cases of Export to Nepal and Bhutan, the RBI has permitted the use of Indian Rupees as the mode of payment. 
  • The definition of export of services was amended to include receipt in Indian rupees as per RBI regulations for the qualification as exports. 
  • The provisions of the relevant date to calculate the period for filing of refund claim is amended to bring it in line with the definition of export of services. The enabling provision of receipt in Indian rupees where permitted by RBI has been added consequently 


  1. Restrictive applicability of Section 5(4) 


The below has been substituted for section 5(4) of CGST Act, 2017 (power of officers) 

The Government may, on the recommendations of the Council, by notification, specify a class of registered persons who shall, in respect of supply of specified categories of goods or services or both received from an unregistered supplier, pay the tax on reverse charge basis as the recipient of such supply of goods or services or both, and all the provisions of this Act shall apply to such recipient as if he is the person liable for paying the tax in relation to such supply of goods or services or both.


      21. Ceiling limit introduced for filing appeal before Appellate Authority and Appellate Tribunal. 


  1. In Section 20 of the IGST Act, 2017(Application of provisions of Central Goods and Services Tax Act) 

    Provided also that where the appeal is to be filed before the Appellate Authority or the Appellate Tribunal, the maximum amount payable shall be fifty crore rupees and one hundred crore rupees respectively has been inserted.

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