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03 January 2020

Goods and Services Tax – Certain amendments effective from 1-1-2020

Central Board of Indirect Taxes and Customs (CBIC) has recently issued many notifications to revise certain provisions of the GST law. The changes relate to amendments in the Central Goods and Services Tax Rules, 2017; changes in the rate and exemption notifications for goods and services; changes in notification relating to reverse charge mechanism for certain services; and amendments in the Transition Plan for J&K. Further, certain amendments as made by the Finance (No. 2) Act, 2019 in the Central Goods and Services Tax Act, 2017 have also been brought into force with effect from 1-1-2020.

Changes in CGST Rules

Rules 117(1A) and 117(4) of the CGST Rules, 2017 has been amended with effect from 1-1-2020 to provide that in cases where the registered person could not submit Tran-1 or Tran-2 on the common portal on account of technical difficulties, they can submit Tran-1 by 31-3-2020 and Tran-2 by 30-4-2020. These dates were 31-12-2019 and 31-1-2020 earlier.

Further, Forms REG-01, GSTR-3A and INV-01 have also been revised to make certain changes. While Form REG-1 will now have an additional field pertaining to “Period of Validity” as per approval order in case of SEZ Unit or Developer, Form GSTR-3A pertaining to ‘Notice to return defaulters under Section 46’ has been amended to state that in case of failing to furnish return within 15 days of notice, tax liability “may” be assessed under Section 62 (best judgement assessment). The word used was “will” instead of “may” earlier. Further, a disclaimer has been added to Form GSTR-3A that this is a system generated notice and does not require signature.

Form INV-1 has been substituted and is similar to E-invoice schema earlier uploaded by GSTN on the common portal, except for addition of certain mandatory and optional details like Invoice Sub Type Code, Billing Trade Name, and Shipping to (Trade Name) details which will be mandatory.

GST rate on certain goods revised

Rate of GST on woven and non-woven bags and sacks of polyethylene or polypropylene strips or the like, whether or not laminated, of a kind used for packing of goods (covered under HSN 3923 or 6305), and on Flexible intermediate bulk containers (covered under HSN 6305 3200) has been revised to 18% from 12%. The change, effective from 1-1-2020, puts at rest the dispute relating to classification of woven & non-woven bags made of polyethylene or polypropylene.

Exemption to upfront amount for long-term lease – Conditions imposed

Sl. No. 41 of the exemption Notification No. 12/2017-CT (R) provides exemption upfront amount payable in respect of service by way of long-term lease of 30 years or more of industrial plots or plots for development of infrastructure for financial business, provided by the State Government Industrial Development Corporations or Undertakings or by any other entity having 50% or more ownership of Central Government, State Government, Union territory to the industrial units or the developers in any industrial or financial business area. The notification has now been amended by Notification No. 28/2019-Central Tax (Rate) to reduce the percentage of ownership from 50% to 20%, and to add certain conditions that the leased plots shall be used only for the purpose for which they are allotted and that State Government shall monitor and enforce the above conditions as per the order issued by State Government in this regard.

RCM for renting of motor vehicle

Notification No. 13/2017-Central Tax (Rate) has been amended to provide that reverse charge mechanism (RCM) shall be applicable on the service by way of renting of any motor vehicle designed to carry passengers where the cost of fuel is included in the consideration charged from the service recipient only if the supplier is other than a body-corporate, does not issue an invoice charging GST @12% from the service recipient, and supplies the service to a body corporate. However, it may be noted that according to a Circular dated 31-12-2019, issued to clarify the amendment, present amendment is merely clarificatory in nature and therefore shall apply for the period 1-10-2019 to 31-12-2019 also.

Amendments by Finance (No.2) Act, 2019

Certain amendments as made by the Finance (No. 2) Act, 2019 have also been brought into force with effect from 1-1-2020. However, the Notification No. 1/2020-Central Tax which prescribes 1st of January 2020 as the date for certain amendments, excludes many amendments as made by the Finance (No.2) Act.

Effectively, amendments relating to National Appellate Authority for Advance Ruling, furnishing of return under Section 39 as per new return procedure, interest chargeability on net cash tax liability under Section 50, and disbursement of refund of State tax by the Government under Section 54, have not yet come into force.

While amendments have been made in Sections 10, 22, 25, 44, 49, 52, 168 and 171, new Sections 31A (Facility of digital payment to recipient) and 53A (Transfer of certain amounts to State/Union Territory tax account) have been inserted in the CGST Act, 2017.

J&K transition

Notification No. 62/2019-Central Tax provided for transition plan in respect of J&K reorganization. It stated that persons whose place of business lies in the erstwhile State of J&K till the 30-10-2019; and lies in the Union territory of J&K or in the Union territory of Ladakh from 31-10-2019 onwards, would be required to follow the special procedure till 31-12-2019 (transition date).

The notification provided for option to transfer the ITC from the registered GSTIN till 30-10-2019 in the State of Jammu and Kashmir, to the new GSTIN in the Union territory of J&K or in the Union territory of Ladakh from 31-10-2019 by following the specified procedure. The said dates have been extended to 31-12-2019 and 1-1-2020, respectively.