CENTRAL GOODS AND SERVICE TAX (AMENDMENTS) ACT, 2018

With Notification No. 02/2019 – Central Tax dated 29th January,2019 ,CGST(Amendment)
Act,2018 shall be applicable with effect from 1st February,2019.Actually this Act of Parliament
received assent of the President on 29th August,2018 , but its applicability date appointed is 1st
February,2019 with Notification No. 02/2019 – Central Tax dated 29th January,2019. These
amendments are the mixture of good news and bad news. So let’s see all the amendments in
detail and decide whether they are good news of bad news. Here are the details of amendments:‐

1. Section 2 ‐Definitions:‐
 A. Section 2(4)‐Definition of “Adjucating Authority”:‐

  Earlier Provision New Provision
“adjudicating authority” means any authority, appointed or authorised to pass any order or decision under this Act, but does not include the Central   Board of Excise and Customs, the Revisional Authority, the Authority for Advance Ruling, the Appellate Authority for Advance Ruling, the Appellate   Authority and the Appellate Tribunal “adjudicating authority” means any authority, appointed or authorised to pass any order or decision under this   Act, but does not include the Central Board of Indirect Taxes and Customs, the Revisional Authority, the Authority for Advance Ruling, the Appellate
Authority for Advance Ruling, the Appellate Authority, the Appellate Tribunal and the Authority referred to in sub‐section (2) of section 171. ( The   Central Government may, constitute an Authority, or empower an existing Authority)

  New Provision
“adjudicating authority” means any authority, appointed or authorised to pass any order or decision under this Act, but does not include the Central Board of Indirect Taxes and Customs, the Revisional Authority, the Authority for Advance Ruling, the Appellate Authority for Advance Ruling, the Appellate Authority, the Appellate Tribunal and the Authority referred to in sub‐section (2) of section 171. ( The Central Government may, constitute an Authority, or empower an existing Authority)

B. Section 2(17)‐ “Business” definition:‐
Earlier Provision
services provided by a race club by way of totalizator or a license to book maker in such club.

New Provision
activities of a race club including by way of totalizator or a license to book maker or activities of a licensed book maker in such club.

C. Section 2(18) – “Business vertical” has been omitted
To ensure clarity in the registration process the concept of business vertical has been removed from GST. A supplier is now allowed to obtain separate registration for each place of his business in a State or Union territory by substituting proviso to sec. 24(2) of CGST Act, 2017.

D. Section ‐2(69)‐ “Local Authority” Definition‐
Earlier Provision
(f) a Development Board constituted under article 371 of the Constitution.

New Provision
(f) a Development Board constituted under article 371 and article 371 J of the Constitution.

E. Section ‐2(102)‐ “Services” Definition‐
Earlier Provision
“services” means anything other than goods, money and securities but includes activities relating to the use of money or its conversion by cash or by any other mode, from one form, currency or denomination, to another form, currency or denomination for which a separate consideration is charged
New Provision
In clause 102 following Explanation has been inserted :‐
Explanation.––For the removal of doubts, it is hereby clarified that the expression “services” includes facilitating or arranging transactions in securities.

2. Section ‐7 –“Scope of Supply”‐ SUPPLY does not include the entries in schedule IISection
7(1) ‐ For the purposes of this Act, the expression “supply” includes:‐
Earlier Provision
(d) the activities to be treated as supply of goods or supply of services as referred to in Schedule II.

New Provision
clause (d) shall be omitted and after subsection (1), the following sub‐section shall be inserted:‐
“(1A) where certain activities or transactions constitute a supply in accordance with the provisions of subsection (1), they shall be treated either as
supply of goods or supply of services as referred to in Schedule II.”
Essence‐ Definition of Supply, gives the reference to schedule II, which had widened the scope of ‘Supply.’ The correction has been made by omitting the reference to Schedule II from the definition of Supply. Now, the schedule II can be read independently u/s 7(1A) of the said act, just to determine the activity as supply of goods or supply of services.

3. Section ‐9 ‐“Levy and Collection of Tax”‐ RCM on supply from unregistered person
Earlier Provision
(4)The central tax in respect of the supply of taxable goods or services or both by a supplier, who is not registered, to a registered person shall be paid by such person on reverse charge basis as the recipient 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 the supply of such goods or services or both.

New Provision
“(4) 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.

Section 10:‐“Composition levy”‐ Threshold limit for Composition Scheme increased to Rs. 1.50 crores also Composition dealer is allowed to provide services
A. Subsection – (1)
Earlier Provision
Proviso to Section 10 :‐
Provided that the Government may, by notification, increase the said limit of fifty lakh rupees to such higher amount, not exceeding one crore rupees, as may be recommended by the Council.

New Provision
Proviso to Section 10:‐
Provided that the Government may, by notification, increase the said limit of fifty lakh rupees to such higher amount, not exceeding one crore and fifty lakh rupees, as may be recommended by the Council.
Essence‐To cover more entities within the ambit of composition scheme and to extend simple compliance, the threshold limit for Composition Scheme has been extended to Rs. 1.5 crore in the preceding financial year.
After said proviso following proviso shall be inserted:‐
Provided further that a person who opts to pay tax under clause (a) or clause (b) or clause (c) may supply services (other than those referred to in  clause (b) of paragraph 6 of Schedule II), of value not exceeding ten per cent of turnover in a State or Union territory in the preceding financial year or five lakh rupees, whichever is higher.
Essence:‐ Composition taxpayers are allowed to supply services (other than restaurant services) ,for upto a value of exceeding 10% of turnover in preceding Financial year or 5 Lakh rupees ,whichever is higher.

5. Section 16‐ “Eligibility and conditions for taking input tax credit”
Sub section ‐2
Earlier Provision
no registered person shall be entitled to the credit of any input tax in respect of any supply of goods or services or both to him unless,––
(a) he is in possession of a tax invoice or debit note issued by a supplier registered under this Act, or such other tax paying documents as may be prescribed;
(b) he has received the goods or services or both.
Explanation.—For the purposes of this clause, it shall be deemed that the registered person has received the goods where the goods are delivered by the supplier to a recipient or any other person on the direction of such registered person, whether acting as an agent or otherwise, before or during movement of goods, either by way of transfer of documents of title to goods or otherwise;
New Provision
The explanation to clause (b) shall be substituted by:‐
Explanation.—For the purposes of this clause, it shall be deemed that the registered person has received the goods or, as the case may be, services––
(i) where the goods are delivered by the supplier to a recipient or any other person on the direction of such registered person, whether acting as an agent or otherwise, before or during movement of goods, either by way of transfer of documents of title to goods or otherwise;
(ii) Where the services are provided by the supplier to any person on the direction of and on account of such registered person.

6. Section 17‐“Apportionment of credit and blocked credits”‐Definition of “Value of
Exempt supply for reversal of ITC”
A. Subsection (3)‐
Earlier Provision
(3) The value of exempt supply under subsection
(2) shall be such as may be prescribed, and shall include supplies on which the recipient is liable to pay tax on reverse charge basis, transactions in securities, sale of land and, subject to clause (b) of paragraph 5 of Schedule II, sale of building.
New Provision
The following explanation shall be inserted:‐
‘Explanation.—For the purposes of this sub‐section, the expression ‘‘value of exempt supply’’ shall not include the value of activities or transactions  specified in Schedule III, except those specified in paragraph 5 of the said Schedule.’

B. Subsection (5) Credit Blocked:‐
Earlier provision
(i) ITC Availability in case of Motor vehicle. Earlier availability of ITC on motor vehicle is very much limited as provided in section 17(5) .ITC on motor vehicle was clearly denied for in the earlier provisions.
(ii) ITC on Vessels or Aircraft
Earlier there were no specific provision in Act related to ITC availability on Vessels or aircraft.Only a phrase “other conveyance was mentioned”.(iii)ITC on GST paid on Repairs and maintenance of Motor Vehicle
Earlier there was no specific provision regarding availing of ITC paid on insurance ,repair and maintenance of Motor vehicle
(iv)ITC on food and beverages,health services etc. allowed if provided under any law
Earlier Act clearly denies for availability of ITC of GST paid on the food and beverages, health services and travel benefit allowed to employees in all cases.

New provision
(i)ITC Availability in case of Motor vehicle
Now, the recent amendment now provides that the ITC shall be available in every situation, if the seating capacity of the motor vehicle is 13 or more (including driver). For other vehicles, the ITC shall be available only if these vehicles are used for the specified purposes. Further the ITC in respect of motor vehicle including dumpers, work‐trucks, fork‐lift trucks and other special purpose motor vehicles, used for transportation of goods shall be
allowed in all cases.

(ii) ITC on Vessels or Aircraft
A separate Clause has been inserted providing provisions for availment of ITC on Vessels and Aircraf which read as follows:‐
ITC shall not be available in case of :‐
(aa) vessels and aircraft except when they are used––
(i) for making the following taxable supplies, namely:—
(A) further supply of such vessels or aircraft; or
(B) transportation of passengers; or
(C) imparting training on navigating such vessels; or
(D) imparting training on flying such aircraft;
(ii) for transportation of goods;

(iii)ITC on GST paid on Repairs and maintenance of Motor Vehicle
Now in amended provision it has been specifically mentioned that Input tax credit of GST paid on services of insurance, servicing, repair and  maintenance of motor vehicles shall not be allowed except in few cases(as mentioned in amended Clause (a) above)

(iv)ITC on food and beverages,health services etc. allowed if provided under any law
But now Amended provisions allows ITC paid on Food and beverages, health services and travel benefit only if the same were provided under any law for the time being in force.

7. Section 22‐“ Persons liable for registration”‐ Registration limit increased to Rs. 20 lakhs for 6 specified States(Arunachal Pradesh, Assam, Himachal Pradesh, Meghalaya, Sikkim and Uttarakhand )
A. Subsection (1)
Earlier Provision
Provided that where such person makes taxable supplies of goods or services or both from any of the special category States, he shall be liable to be registered if his aggregate turnover in a financial year exceeds ten lakh rupees.

New Provision
After the proviso the following proviso shall be inserted:‐
“Provided further that the Government may, at the request of a special category State and on the recommendations of the Council, enhance the aggregate turnover referred to in the first proviso from ten lakh rupees to such amount, not exceeding twenty lakh rupees and subject to such conditions and limitations, as may be so notified.”
Essence‐Amendments to Section 22 of CGST Act increase the registration threshold to Rs.20 Lakhs as compared to Rs.10 Lakhs for some specified states i.e. (Arunachal Pradesh, Assam, Himachal Pradesh, Meghalaya, Sikkim and Uttarakhand )

8. Section 24‐“Cumpolsory registration in certain cases”:‐ Exemption from compulsory GST registration for e‐commerce operators who are not required to collect TCS
Earlier Provision
Clause (x) every electronic commerce operator.

New Provision
Clause (x) every electronic commerce operator who is required to collect tax at source under section 52. Section 52:‐Collection of tax at source in
certain cases in GST. Essence‐Registration in GST is compulsory for only those E‐commerce operators who are required to collect tax at source under
section 52 of GST Act.

9. Section 25 “Procedure of Registration”:‐ Allowing separate registration for SEZ & non‐SEZ unit in same state
Earlier provision related to separate registration of SEZ and non‐SEZ unit in same state was mentioned in rule 8 of CGST rules, 2017 only.But now it has also been inserted in CGST (Amendments),2018 as 2nd proviso to section 25 which states as under:‐
“Provided further that a person having a unit, as defined in the Special Economic Zones Act, 2005, in a Special Economic Zone or being a Special
Economic Zone developer shall have to apply for a separate registration, as distinct from his place of business located outside the Special Economic Zone in the same State or Union territory.”
Essence‐This provision mandate a separate registration of SEZ unit in case a taxable person have both SEZ & non SEZ unit in same state.

10. Section 29 “Cancellation of registration” (now changed to “Cancellation or suspension of registration”)‐ Temporary suspension of Registration during the tenure of cancellation proceedings.
A new proviso has been inserted in Section 29(1) after clause (c) which states as:‐
“Provided that during pendency of the proceedings relating to cancellation of registration filed by the registered person, the registration may be suspended for such period and in such manner as may be prescribed.”
Essence‐This provision is the relief to small tax payer. According to this provision registration of registered taxpayer shall be suspended till the completion of procedural formalities of cancellation of the registration.

11. Section 35 “Accounts and Records”:‐If books are subject to compulsory Audit by CAG, Govt. department exempted from Audit under GST act‐
In sub section (5) following proviso has been inserted:‐
“Provided that nothing contained in this sub‐section shall apply to any department of the Central Government or a State Government or a local authority, whose books of account are subject to audit by the Comptroller and Auditor‐General of India or an auditor appointed for auditing the accounts of local authorities under any law for the time being in force.”.
Essence‐Every registered person need to get his account audited if his turnover during Financial Year exceeds Rs.2 crore .Therefore to avoid double auditing of accounts this provision was inserted which states that govt. departments who required to get there accounts compulsorily audited by CAG need not to get accounts audited by Chartered accountant or Cost Accountant .

12. Section 49‐“Payment of Tax, Interest, penalty and other amount‐
A new proviso has been inserted in sub section (5) :‐
“Provided that the input tax credit on account of State tax shall be utilized towards payment of integrated tax only where the balance of the input tax credit on account of central tax is not available for payment of integrated tax.”
Essence‐This provision provides a clarification on matter that Input of SGST can be utilised for the payment of IGST only if CGST Balance is not available.

13. After Section 49 the following new section has been inserted:‐
Utilisation of Input tax credit subject to certain conditions
49A. Notwithstanding anything contained in section 49, the input tax credit on account of central tax, State tax or Union territory tax shall be utilised towards payment of integrated tax, central tax, State tax or Union territory tax, as the case may be, only after the input tax credit available on account of integrated tax has first been utilised fully towards such payment. Order of Utilisation of input tax credit
49B. Notwithstanding anything contained in this Chapter and subject to the provisions of clause (e) and clause (f) of sub‐section (5) of section 49, the Government may, on the recommendations of the Council, prescribe the order and manner of utilisation of the input tax credit on account of integrated tax, central tax, State tax or Union territory tax, as the case may be, towards payment of any such tax.
Essence‐The amendment has been made for utilization of SGST or UTGST credit for payment of Output IGST only if balance of ITC on account of IGST is not available for payment of Output IGST. This amendment has been made to bring the law in sync with the GST portal which restricts the utilization of Input SGST and UTGST towards payment of Integrated GST.
14. Section 54‐“Refund of Tax”:‐ the Govt. has allowed the registered suppliers to receive the payment in respect of export of services in Indian rupees
Earlier provision
In Explanation to this section in clause (2):‐
Sub clause (c)‐ in the case of services exported out of India where a refund of tax paid is available in respect of services themselves or, as the case may be, the inputs or input services used in such services, the date of––
Item (i) receipt of payment in convertible foreign exchange, where the supply of services had been completed prior to the receipt of such payment;

New provision
Item (i) receipt of payment in convertible foreign exchange, where the supply of services had been completed prior to the receipt of such payment;or in Indian rupees wherever permitted by the Reserve Bank of India” shall be inserted
Essence‐ As per earlier provisions, the payment for export of services shall be received in convertible foreign exchange. The exporters contended that the payment of exports should be allowed in the Indian rupees in case of export of services. Accordingly, the Govt. has allowed the registered suppliers to receive the payment in respect of export of services in Indian rupees, if permitted by the RBI.

15. Section 107‐“Appeals to Appellate Authority” and Section 112‐“Appeals to Appellate Tribunal”‐Govt. Notifies Upper limit for pre‐deposit for making Appeals to Appellate Authority and Appellate Tribunal.
Earlier provision
Earlier there was no ceiling to Amount to be pre‐deposit for making Appeals to Appellate Authority and Appellate Tribunal.
New Provision
Now Ceiling has been set for both appeals to Appellate Authority and Appellate Tribunal at Rs.25 crore and Rs.50 Crore respectively.

16. Section 129‐“Detention, seizure and release of goods and conveyances in transit”‐ .
Increase in time limit after payment of tax & penalty for release for seized goods
Earlier provision
Where the person transporting any goods or the owner of the goods fails to pay the amount of tax and penalty as provided in sub‐section (1) within seven days of such detention or seizure, further proceedings shall be initiated in accordance with the provisions of section 130.
Provided that where the detained or seized goods are perishable or hazardous in nature or are likely to depreciate in value with passage of time, the said period of seven days may be reduced by the proper officer.
New Provision
Where the person transporting any goods or the owner of the goods fails to pay the amount of tax and penalty as provided in sub‐section (1) within seven days of such detention or seizure, further proceedings shall be initiated in accordance with the provisions of section 130.
Provided that where the detained or seized goods are perishable or hazardous in nature or are likely to depreciate in value with passage of time, the said period of fourteen days may be reduced by the proper officer.

17. Section 140‐“Transitional arrangements for input tax credit”‐disallowing the credit of Krishi Kalyan Cess or other cess outrightly.’.
Earlier provision
(1) A registered person, other than a person opting to pay tax under section 10,shall be entitled to take, in his electronic credit ledger, the amount of CENVAT credit carried forward in the return relating to the period ending with the day immediately preceding the appointed day, furnished by
him under the existing law in such manneras may be prescribed
New Provision
(1) A registered person, other than a person opting to pay tax under section 10, shall be entitled to take, in his electronic credit ledger, the amount of CENVAT credit of eligible duties carried forward in the return relating to the period ending with
the day immediately preceding the appointed day, furnished by him under the existing law in such manner as may be prescribed. Essence‐ Sec 140(1) of CGST Act, 2017 has been amended for disallowing the credit of Krishi Kalyan Cess or other cess outrightly.

18. Schedule I –“Activities to be treated as suppy even if made without consideration”‐
Import of services to be taxed even if made by a person other than taxable person
Earlier Provision
Paragraph 4:‐ Import of services by a taxable person from a related person or from any of his other establishments outside India, in the course or  furtherance of business.
New provision
Paragraph 4:‐ Import of services by a person from a related person or from any of his other establishments outside India, in the course or furtherance of business. Essence‐With the amendment to the CGST act, the import of services would be taxed even if any person other than a taxable person receives the service with or without consideration.

19. Schedule III‐ “Activities or transactions which shall be treated neither as a supply of goods nor a supply of services”‐Scope of schedule III has been increased by amendments by adding these entries:‐
After paragraph 6, the following paragraph shall be inserted:‐
7. Supply of goods from a place in the non‐taxable territory to another place in the nontaxable territory without such goods entering into India.
8. (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 consumption
* “warehoused goods” shall have the same meaning as assigned to it in the
Customs Act, 1962”(As per explanation 2 given in CGST(Amendment)Act,2018

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