Ten Most Important GST Provisions will be effective from January 2021 on GST payable on Goods or Services Provided by any Club or Association to its Members, GST Provision related to communication of Details of invoice or debit note to the recipient, Scope of Self Assessed Tax, and many more.
The Government had notified the Finance Act 2021 wherein sections 2 to 88 shall come into force on the 1st day of April 2021 and sections 108 to 123 shall come into force on such date as the Central Government may, by notification in the Official Gazette, appoint. Here’s the list of Sections notified as with effect from January 1, 2022.
In the Central Goods and Services Tax Act, 2017, section 7 (1)(aa) has been inserted and shall be deemed to have been inserted retrospectively with effect from the 1st day of July 2017.
Section 7 (1)(aa) says that the person (association or club) and its members or constituents shall be deemed to be two separate persons and the supply of activities or transactions inter se shall be deemed to take place from one such person to another. Further, the activities or transactions, by a person, other than an individual, to its members or constituents or vice-versa, for cash, deferred payment, or other valuable consideration.
Judicial Precedent
The Supreme Court of India in the case of State of West Bengal v Calcutta Club Ltd. ruled that services rendered by incorporated clubs to members are exempted from service tax.
The Bench constituting Justice R.F. Nariman, Justice Surya Kant, and Justice V. Ramasubramanian held while referring to the Statement of Objects and Reasons that sub-clause (f) to Article 366 of clause 29-A (which permits the States to impose a tax on the supply of food and drink) does not include ‘goods’ in their entirety. Upholding the position laid in Young Men’s Indian Association it was held that supply of various preparations by each club to its members would not amount to a transfer of property from one to another and hence there would be no sale eligible to tax. The club would only act as an agent for its members even if the club is a distinct legal entity and hence the Doctrine of Mutuality subsists.
The CBIC has inserted Section 16(2)(aa) which lays down the condition for claiming the Input Tax Credit (ITC). It mandates that the details of the invoice or debit note referred to in clause (a) has been furnished by the supplier in the statement of outward supplies and such details have been communicated to the recipient of such invoice or debit note in the manner specified under section 37.
In section 74 of the Central Goods and Services Tax Act, in Explanation 1, in clause (ii), for the words and figures “sections 122, 125, 129 and 130”, the words and figures “sections 122 and 125” shall be substituted.
Where the notice under the same proceedings is issued to the main person liable to pay tax and some other persons, and such proceedings against the main person have been concluded under section 73 or section 74, the proceedings against all the persons liable to pay penalty under sections 122 and 125 are deemed to be concluded.”
The explanation in Section 75 has been inserted to widen the scope of ‘self-assessed tax’ which shall include the tax payable in respect of details of outward supplies furnished under section 37, but not included in the return furnished under section 39. This amendment will result in the initiation of direct recovery proceedings by the department.
In section 83 of the Central Goods and Services Tax Act, for sub-section (1), the following sub-section shall be substituted, namely “Where, after the initiation of any proceeding under Chapter XII, Chapter XIV or Chapter XV, the Commissioner is of the opinion that for the purpose of protecting the interest of the Government revenue it is necessary so to do, he may, by order in writing, attach provisionally, any property, including bank account, belonging to the taxable person or any person specified in sub-section (1A) of section 122, in such manner as may be prescribed.”
Before the amendment the provisional attachment can be initiated only during the pendency of proceedings, however, now it can be done after initiation of proceedings under Chapter XII, XIV, or XV.
In section 107 of the Central Goods and Services Tax Act, in sub-section (6), the following proviso shall be inserted, namely, “Provided that no appeal shall be filed against an order under sub-section (3) of section 129 unless a sum equal to twenty-five percent. of the penalty has been paid by the appellant.”
The CBIC has increased the Pre Deposit of Disputed Tax Amount in case of E-way bill violation from 10% to 25%.
The Finance Act 2021 seeks to amend section 129 of the Central Goods and Services Tax Act which provides for the payments to seek release of the conveyance/goods that have been detained on account of E-way bill violations.
Where the owner comes forward, in case of Taxable goods Penalty equal to 200% of the tax payable and for Exempted goods an amount of 2% of the value of goods or Rs. 25,000/-; whichever is less.
Where the owner does not come forward, in case of taxable goods: Penalty equal to 50% of the value of goods or 200% of the tax payable; whichever is higher, and for exempted goods, an amount of 5% of the value of goods or Rs. 25,000/-; whichever is less.
In section 130 of the Central Goods and Services Tax Act, (a) in sub-section (1), for the words “Notwithstanding anything contained in this Act, if ”, the word “Where” shall be substituted; (b) in sub-section (2), in the second proviso, for the words, brackets and figures “amount of penalty leviable under sub-section (1) of section 129”, the words “penalty equal to hundred per cent. of the tax payable on such goods” shall be substituted; (c) subsection (3) shall be omitted.
Section 130 dealing with the confiscation of goods/ conveyance shall be completely de-linked from the provisions related to detention/seizure contained under section 129. Hence confiscation can be made only if the ingredients specified under section 130(1) are satisfied independent of Section 129(1).
For section 151 of the Central Goods and Services Tax Act, the following section shall be substituted, namely “151. The Commissioner or an officer authorised by him may, by an order, direct any person to furnish information relating to any matter dealt with in connection with this Act, within such time, in such form, and in such manner, as may be specified therein.”.
In section 152 of the Central Goods and Services Tax Act, (a) in sub-section (1), (i) the words “of any individual return or part thereof” shall be omitted; (ii) after the words “any proceedings under this Act”, the words “without giving an opportunity of being heard to the person concerned” shall be inserted; (b) sub-section (2) shall be omitted.
In section 168 of the Central Goods and Services Tax Act, in sub-section (2), (i) for the words, brackets, and figures “sub-section (1) of section 44”, the word and figures “section 44” shall be substituted; (ii) the words, brackets and figures “sub-section (1) of section 151,” shall be omitted.
In Schedule II of the Central Goods and Services Tax Act, paragraph 7 shall be omitted and shall be deemed to have been omitted with effect from the 1st day of July 2017.
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