Budget changes in GST-Finance Act, 2024 extract dated 16.08.2024-Part 3!

To give effect to the financial proposals in Budget 2024 of the Central Government for the financial year 2024-25, THE FINANCE (No. 2) ACT, 2024 is published by the Government on 16^th August 2024.

We have covered these changes in 3 parts. 

To read Part I, click here.

To read Part II, click here.

Let’s discuss the remaining changes in Part III!

Amendment of section 109

Section 109 of the CGST Act, 2017 deals with the Constitution of the Appellate Tribunal and Benches thereof. The following are the amendments:

• Its sub-section 1 states that the Government shall, on the recommendations of the Council, by notification, establish with effect from such date as may be specified therein, an Appellate Tribunal known as the Goods and Services Tax Appellate Tribunal for hearing appeals against the orders passed by the Appellate Authority or the Revisional Authority. The words “or for conducting an examination or adjudicating the cases referred to in sub-section (2) of section 171, if so notified under the said section” are inserted after the existing wordings of this section.

After amendment, it is read as follows:

“(1) The Government shall, on the recommendations of the Council, by notification, establish with effect from such date as may be specified therein, an Appellate Tribunal known as the Goods and Services Tax Appellate Tribunal for hearing appeals against the orders passed by the Appellate Authority or the Revisional Authority, or for conducting an examination or adjudicating the cases referred to in sub-section (2) of section 171, if so notified under the said section.”

This amendment aims to give effect to the implementation of cases of Anti-profiteering.

• Its sub-section 5 states that The Principal Bench and the State Bench shall hear appeals against the orders passed by the Appellate Authority or the Revisional Authority. Two new provisos are added to this sub-section as follows:

"Provided further that the matters referred to in sub-section (2) of section 171 shall be examined or adjudicated only by the Principal Bench:

Provided also that the Government may, on the recommendations of the Council, notify other cases or class of cases which shall be heard only by the Principal Bench."

• Its sub-section 6 states that the President shall, from time to time, by a general or special order, distribute the business of the Appellate Tribunal among the Benches and may transfer cases from one Bench to another. New words “Subject to the provisions of sub-section (5)” are added before existing wordings of this section.

Amendment of section 112

Section 112 of the CGST Act, 2017 deals with Appeals to Appellate Tribunal. The following amendments are made to this section:

• With effect from 01.08.2024, in sub-section (1), after the words "from the date on which the order sought to be appealed against is communicated to the person preferring the appeal", the words "; or the date, as may be notified by the Government, on the recommendations of the Council, for filing appeal before the Appellate Tribunal under this Act, whichever is later." shall be inserted. This amendment empowers the Government to grant an extension of the time limit for filing an appeal in the tribunal.
• With effect from 01.08.2024, in sub-section (3), after the words "from the date on which the said order has been passed", the words "; or the date, as may be notified by the Government, on the recommendations of the Council, for applying to the Appellate Tribunal under this Act, whichever is later," shall be inserted.
• In sub-section (6), after the words, brackets, and figure "after the expiry of the period referred to in sub-section (1)", the words, brackets, and figure "or permit the filing of an application within three months after the expiry of the period referred to in sub-section (3)" shall be inserted. This amendment grants 3 months from the date notified by the Government for admission of appeal.
• In sub-section (8), in clause (b),

(i) For the words "twenty percent.", the words "ten percent." shall be substituted;

(ii) For the words "fifty crore rupees", the words "twenty crore rupees" shall be substituted.

Amended sub-section 8 is read as follows:

“No appeal shall be filed under sub-section (1) unless the appellant has paid--

(a) In full, such part of the amount of tax, interest, fine, fee, and penalty arising from the impugned order, as is admitted by him, and

(b) A sum equal to ten percent. of the remaining amount of tax in dispute, in addition to the amount paid under sub-section (6) of section 107, arising from the said order, subject to a maximum of twenty crore rupees concerning which the appeal has been filed.”

Amendment of section 122

Section 122 of the CGST Act, 2017 deals with Penalty for certain offences. As per its sub-section 1B, if the E-commerce operator allows un-registered persons to trade through it or allows inter-state supply to ineligible traders or fails to furnish details of a person exempted from registration in GSTR 8, liable to pay a penalty of ten thousand rupees, or an amount equivalent to the amount of tax involved, whichever is higher. 

W.e.f. 01.10.2023, the words “who is liable to collect tax at source under section 52” are added after “Any electronic commerce operator”. This specifies that these penalty provisions are applicable only if the E-commerce operator is required to collect TCS.

Amendment of section 140

Section 140 of the CGST Act, 2017 deals with transitional arrangements for input tax credit. Its sub-section 7 states that notwithstanding anything to the contrary contained in this Act, the input tax credit on account of any services received before the appointed day by an Input Service Distributor shall be eligible for distribution as credit under this Act, within such time and in such manner as may be prescribed, even if the invoices relating to such services are received on or after the appointed day.

W.e.f. 01.07.2017, the words “whether the invoices relating to such services are received before, on or after, the appointed day” are substituted for the words “even if the invoices relating to such services are received on or after the appointed day”.

Amendment of section 171

Section 171 of the CGST Act, 2017 deals with Anti-profiteering measures. Its sub-section 2 states that the Central Government may, on recommendations of the Council, by notification, constitute an Authority, or empower an existing Authority constituted under any law for the time being in force, to examine whether input tax credits availed by any registered person or the reduction in the tax rate have resulted in a commensurate reduction in the price of the goods or services or both supplied by him.

The following proviso is inserted after the existing wordings:

“Provided that the Government may by notification, on the recommendations of the Council, specify the date from which the said Authority shall not accept any request for examination as to whether input tax credits availed by any registered person or the reduction in the tax rate have resulted in a commensurate reduction in the price of the goods or services or both supplied by him.

Explanation.--For this sub-section, "request for examination" shall mean the written application filed by an applicant requesting for examination as to whether input tax credits availed by any registered person or the reduction in the tax rate have resulted in a commensurate reduction in the price of the goods or services or both supplied by him.”

This amendment empowers the Government to set a cut-off date for accepting anti-profiteering applications. As per the 53rd GST Council meeting, the recommended sun-set date of 01.04.2025 for receipt of any new application regarding anti-profiteering.

Amendment to Schedule III

Schedule III of the CGST Act, 2017 contains the list of activities that are neither treated as a supply of goods nor a supply of services. Two new activities are added to the list as follows:

"9. Activity of apportionment of co-insurance premium by the lead insurer to the co-insurer for the insurance services jointly supplied by the lead insurer and the co-insurer to the insured in co-insurance agreements, subject to the condition that the lead insurer pays the central tax, the State tax, the Union territory tax and the integrated tax on the entire amount of premium paid by the insured.

10. Services by the insurer to the reinsurer for which ceding commission or the reinsurance commission is deducted from the reinsurance premium paid by the insurer to the reinsurer, subject to the condition that the central tax, the State tax, the Union territory tax and the integrated tax is paid by the reinsurer on the gross reinsurance premium payable by the insurer to the reinsurer, inclusive of the said ceding commission or the reinsurance commission."

Conclusion

In conclusion, the amendments brought forward by the Finance (No. 2) Act, 2024 aim to strengthen the GST framework, enhance compliance, and streamline the legal processes related to tax administration. The changes to sections 109, 112, 122, 140, and 171 of the CGST Act, 2017 reflect the government's commitment to simplifying procedures and addressing key issues like anti-profiteering and transitional arrangements for input tax credit. Moreover, the amendments in Schedule III clarify the tax treatment of co-insurance and reinsurance activities, providing more transparency in the insurance sector. As these updates come into effect, they will play a crucial role in improving the efficiency and fairness of the tax system for businesses and taxpayers alike.

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