Both houses of parliament have passed the Finance Act 2021, and the President has given his assent on 29.3.2021.
The CGST and IGST Acts, as well as the Central Sales Tax Act 1956, were repealed by the Finance Act 2021.
The following are some of the main features:
1. Subsection (1) of Section 7 is amended to add clause (aa) to provide that activities or transactions by a person other than an entity to its members or constituents, or vice versa, for cash, deferred payment, or other valuable consideration, are included in the scope of supply. For the purposes of this clause, it is clarified that, notwithstanding anything contained in any other law currently in force or any judgement, decree, or order of any Court, tribunal, or authority, a person and its members or constituents shall be deemed to be two separate persons and the supply of activities or transactions shall be deemed. As a result, the mutuality claim is no longer valid.
2. Clause (aa) has been added to section 16, sub-section (2), after clause (a), to state that the particulars of the invoice or debit note referred to in clause (a) have been furnished by the supplier in the declaration of outward supplies and have been transmitted to the receiver of such invoice or debit note in the manner stated under section 37. This is a new stipulation for alleging ITC.
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3. There is no provision for auditing annual reports. As a result, regardless of turnover, a taxable individual would no longer be forced to have his books of accounts audited by a chartered accountant or a cost accountant.
4. Due to the omission of the provision for audit, the annual return u/s 44 is no longer expected to be filed with audited accounts. Only the taxable individual is allowed to self-certify the reconciliation declaration. An Input Service Distributor, an individual paying tax under section 51 or section 52, a casual taxable person, and a non-resident taxable person are all exempt from this clause.
5. The proviso to Section 50 is replaced to add effect to the obligation of interest on the sum paid in cash and the whole tax.
6. Section 74’s Explanation (1) (ii) provided for the completion of all prosecutions for penalties under sections 122, 125, 129, and 130 after the termination of proceedings under sections 73 or 74. Amendment proceedings under sections 125 and 129 are no longer considered to be completed. As a result, the proceedings under sections 125 and 129 will continue.
7. An explanation has been added to section 75, stating that the term “self-assessed tax” includes the tax due on details of outward supplies furnished under section 37 but not included in the return filed under section 39. Previously, the tax was only considered for recovery when a Return u/s 39 was filed. Also, outward supplies that are included in a declaration u/s 37 but are not included in a return u/s 39 will now be called self-assessed tax.
8. Section 83 has been amended to broaden the definition of provisional attachment to include all proceedings under Chapters XII, XIV, or XV. It stated that if the Commissioner believes that attaching some property, including a bank account, is necessary to protect the government’s revenue interests, he can do so provisionally. Previously, only a few parts of each chapter were available for provisional attachment.
9. The amendment to section 107 states that no appeal can be filed against an order made under sub-section (3) of section 129 unless the appellant has paid an amount equal to 25% of the penalty. Previously, tax and penalty payments were both 10%; currently, tax pre-payment is still 10%, but penalty pre-payment is increased to 25%
10. The changes to sections 129 and 130 were made to ensure that the E-Way Bill was followed to the letter.
- (i)Instead of a tax and a 100% penalty, a straight penalty of 200% of the tax is now available, and the money will not be used to pay taxes as it was previously. When the owner of the product comes forward to pay the penalty, this is what happens.
- (ii) In the event that the owner fails to pay the penalty, it will be equal to 50% of the value of the goods or 200% of the tax due on those goods, whichever is higher.
- (iii)Because the provisions of section 129(1)(c) overlapped, subsection (2) was omitted.
Net Indirect Tax (GST and Non-GST) Collections Jump 12% to Rs 10.71 Lakh Crore
- (iv)The proper officer detaining or capturing merchandise or conveyance shall issue a notice stating the penalty payable within seven days of such detention or seizure and then pass an order for payment within seven days of the date of service of such notice. The action of issuing a notice is to be completed within seven days, and the order to be passed is to be completed within seven days.
- (v)A hearing of the individual concerned is required under section 129(4) for the purpose of levying tax, interest, and penalty. There is no longer a need for a hearing to levy tax and interest, and a hearing on just the penalty is available.
- (vi) Subsection (6) has been added, which states that if the person transporting or owning the goods fails to pay the penalty within fifteen days of receiving a copy of the order, the goods or conveyance detained or seized can be sold or otherwise disposed of to recover the penalty owed.
- (vii) It now states that the conveyance will be issued upon payment of a penalty or one lakh rupees, whichever is less, by the transporter. Only the conveyance, not the goods, was sought to be published. Previously, failure to pay tax and penalties resulted in the initiation of proceedings under section 130.
- (viii) Section 130(2) set a cap on fines and penalties that could not exceed the market value of products but included a penalty refund under section 129(1), which was raised to 200%. As a result, the rebate will now be limited to 100% of the tax.
- (ix) Section 130(3) has been deleted, which means that if an individual has paid a fine in lieu of confiscation, he is no longer liable for any fee, penalty, or charges due on those products.
11. The omission of item 7 from Schedule II is a result of section 7 being amended.
12. In section 16 of the Integrated Goods and Services Tax Act of 2017, approved operations are SEZ Units or to developers are also provided for zero-rated supply eligibility.
13. Under the Integrated Goods and Services Tax Act of 2017, the ability to clear goods after paying the IGST and then claiming a refund of the IGST payment has been removed, and only notified persons or goods are liable. All exports must now be cleared by Bond or LUT.
14. Section 8(3)(b) of the Central Sales Tax Act 1956 has been amended to allow the purchase of goods at a reduced rate for goods covered by the classification of goods under Section 2 of the Act (d). As a result, products used in the generation or distribution of electricity, mining, or telecommunication are no longer eligible for purchase at a reduced rate on the C Form.This amendment does not overturn High Court and Supreme Court decisions (Commissioner of Commercial Taxes & Anr. Vs Ramco Cements Ltd.Etc., Supreme Court of India, In Appeal Number Special Leave to Appeal (C) No(s) 15785-15788/2020, held by an Order dt 24/03/2021) holding that the concessional rate is also valid for the purchase of products other than those mentioned in section 2. (d). approving the Madras High Court’s decision that the Respondent and Petitioner in this case are entitled to obtain C form for the purchase of goods other than those mentioned in Section 2(d) of the CST Act, and dismissing the SLP.