by Adv. Dr. Gaurav Gupta

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Changes in GST

I. Levy on Clubs, societies etc.

Amendment:

A new clause (aa) in sub-section (1) of Section 7 of the CGST Act is being inserted, retrospectively with effect from the 1st July, 2017, so as to ensure levy of tax on activities or transactions involving supply of goods or services by any person, other than an individual, to its members or constituents or vice-versa, for cash, deferred payment or other valuable consideration.

Consequent to the amendment in section 7 of the CGST Act paragraph 7 of Schedule II to the CGST Act is being omitted retrospectively, with effect from the 1st July, 2017.

Analysis:

Post Judgement of Hon’ble Supreme Court in the case of State of West Bengal v Calcutta Club Limited[1], supply of goods and services to members by club were held to be non taxable for the following reasons:

· The doctrine of mutuality continues to be applicable to incorporated and unincorporated members’ clubs after the 46^th Amendment adding Article 366(29-A)[2] to the Constitution of India. (2) Young Men’s Indian Association (supra) and other judgments which applied this doctrine continue to hold the field even after the 46th Amendment.

· Sub-clause (f) of Article 366(29-A) has no application to members’ clubs in terms of levy of VAT.

· In respect of Service Tax, the levy was struck down on the count that as the same expression has been used in Explanation 3 post-2012 (as opposed to the wide definition of “person” contained in Section 65B(37)), it may be assumed that the legislature has continued with the pre-2012 scheme of not taxing members’ clubs when they are in the incorporated form.

Despite the above inclusion, supply of goods by member’s club to members was held to be non taxable by the Apex Court. No such provision exists in current GST era. Accordingly, to overcome the handicap in taxing the member’s club transactions, the following inclusion has been introduced in the definition of “Supply”:

“(aa) the activities or transactions, by a person, other than an individual, to its members or constituents or viceversa, for cash, deferred payment or other valuable consideration.

Explanation.––For the purposes of this clause, it is hereby clarified that, notwithstanding anything contained in any other law for the time being in force or any judgment, decree or order of any Court, tribunal or authority, the person 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;”.

The above clause tries to bring in two deeming fiction:

the person and its members or constituents shall be deemed to be two separate persons
supply of activities or transactions inter se shall be deemed to take place from one such person to another

Thus, the two deeming fiction read together tries to bring the person and its member transaction within the ambit of GST. However, the following points are still required to be satisfied:

The entry has been introduced in Section 7 and not under Schedule I – Accordingly, a question can arise that can there be a consideration payable between member and club when there is a concept of mutuality (one cannot supply to oneself) and thus, one can also not be liable to pay to oneself. Thus, when consideration itself cannot be there, the question of such transaction satisfying clause (aa) may be tested in the court of law.
The entry has been introduced retrospectively from 1.7.2017, thus, the very question of a substantial amendment taking place retrospectively shall be tested.
The entry brings in a deeming fiction of two separate person concept – thus it fortifies the thought that the two so called persons – person and its members or constituents are effectively one person and thus, it supports the cause of all taxpayers of not paying taxes on all such cases in past.
When there was a constitutional amendment required to bring in tax under erstwhile law (Sales Tax /VAT) since the natural meaning of definition of Sale did not include the concept of supply from club to members, can the concept be introduced merely by amending the supply definition when the constitution does not provide for any such deeming fiction in the term – supply? In the humble view of the author, the amendment in absence of any constitutional support may fall. This becomes more important in light of the decision of Apex Court in the case of Calcutta Club.

II. ITC available after Supplier uploads detail in GSTR-1

Amendment:

A new clause (aa) to sub-section (2) of the section 16 of the CGST Act is being inserted to provide that input tax credit on invoice or debit note may be availed only when the details of such invoice or debit note have 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.

Analysis:

Section 16 (the enabling provision for Input Tax Credit “ITC”) has been amended to provide for another condition. The new condition must also be fulfilled to avail the benefit of ITC, which reads as under:

“(aa) 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”

The above amendment tries to bring a legal force to GSTR 2A / 2B (where all inward supplies purchased by a person are reflected electronically) details. Thus, the condition requires the buyer to check whether the details of the invoice or debit note of which he wish to avail the ITC is duly reflecting in his GSTR 2A or not. The implications of this amendment are as follows:

Rule 36(4) may become redundant as there is no provision for any prescription of any provisional credit (currently at 5%) in this new insertion. Thus, only ITC appearing in GSTR 2A/2B would become eligible for availment.
This provision would give force to entries appearing in GSTR 2A/ 2B as a valid proof of supply (but not a proof of receipt of goods / services)
A great step to promote compliance.

The above amendment also draws linkage to Para 4.11 of the minutes of 29^th GST Council meeting wherein the proposal to link GSTR-1 and tax payment with ITC of taxpayer was proposed by January 2021.

However, the above provision has certain shortcomings:

SME Suppliers would be required to upload invoices before getting their payments (as e invoicing is already implemented for large taxpayers)
Real time / monthly reconciliations of purchases with GSTR 2A / 2B to identify suppliers who have not uploaded their invoices would become a challenge for many
Many taxpayers would prefer to purchase only from suppliers having e invoicing as there would never be a fault in such invoices, thus hitting the taxpayers of less than 100 crores

III. No more GST Audit by professionals

Amendment:

· Sub-section (5) of section 35 of the CGST Act is being omitted so as to remove the mandatory requirement of getting annual accounts audited and reconciliation statement submitted by specified professional.

· Section 44 of the CGST Act is being substituted so as to remove the mandatory requirement of furnishing a reconciliation statement duly audited by specified professional and to provide for filing of the annual return on self- certification basis. It further provides for the Commissioner to exempt a class of taxpayers from the requirement of filing the annual return.

Analysis:

Section 35 and 44 has been amended to remove requirement of GST audit by professionals. The requirement for audited reconciliation has been replaced by a self certified reconciliation statement reconciling the value of supplies declared in the return furnished for the financial year, with the audited annual financial statement for every financial year electronically. Thus, every person required to file annual return would be required to file a self certified reconciliation of his as well.

IV. Interest payable on tax paid by Cash ledger only

Amendment:

Section 50 of the CGST Act is being amended, retrospectively, to substitute the proviso to sub-section (1) so as to charge interest on net cash liability with effect from the 1st July, 2017.

Analysis:

This provision would bring respite to many pending cases where the GST department has required taxpayer to pay interest on the total tax paid in the return filed after the due date including that [portion of tax which is paid by using ITC (debiting electronic credit ledger). The provision the way it is worded requires deliberation on following points:

· When the basic proviso was introduced from 1.08.2019, can it be substituted retrospectively from 1.7.2017. Since the provision is in the favour of the taxpayer, there may not be any challenge to this.

· The provision does not give relief interest on the following amounts:

o Any unpaid tax even balance is lying in his electronic cash / credit ledger

o Tax payable in one tax period but paid later would not enjoy such relief even when paid by ITC for eg. A taxpayer paid short tax of Rs. 1 Lakh in October 2020. He paid the same by using the carried forward ITC in the month of November 2020. As per the current version of the section, he would be required to pay interest on tax of Rs. 1 Lakh for thew period of delay even if the same is paid by ITC.

o Any tax which is wrongly paid as CGST / SGST in place of IGST or vice versa and rectified later (benefit of Section 77 may be examined separately).

o Any ITC which is wrongly availed as CGST / SGST in place of IGST or vice versa and rectified later.

o Return not filed and tax not paid upto initiation of any proceedings under Section 73/74 in respect of such tax period would not get this benefit even when amount is lying in Cash / Credit ledger of the taxpayer

· Persons who had paid interest on gross value in past should apply for refund once the provision is effected.

V. Amendments in provision relating to detention / confiscation of goods in transit

Amendment:

· Section 74 of the CGST Act is being amended so as make seizure and confiscation of goods and conveyances in transit a separate proceeding from recovery of tax.

· Section 129 of the CGST Act is being amended to delink the proceedings under that section relating to detention, seizure and release of goods and conveyances in transit, from the proceedings under section 130 relating to confiscation of goods or conveyances and levy of penalty.

· Section 130 of the CGST Act is being amended to delink the proceedings under that section relating to confiscation of goods or conveyances and levy of penalty from the proceedings under section 129 relating to detention, seizure and release of goods and conveyances in transit.

Analysis:

Proceedings of Section 129 / 130 delinked from Section 74

Section 129 and 130 proceedings have been given distinct standing and its linkage to Section 74 has been deleted. This means that the conclusion of proceedings for a tax period under Section 74 would not bring respite to proceedings under Section 129 / 130 in respect of transactions recorded by the taxpayer for such tax period and made part of proceedings under section 74. Thus, action and penal consequences under Section 129 and 130 would need to be concluded separately.

No tax but only penalty under Section 129

Section 129 has been amended to remove collection of tax and provide for imposition of only penalty. The penalty has been enhanced as under:

Where the owner comes forward for payment of such penalty

· 200% of tax payable

· 2% of value of goods or Rs. 25,000 whichever is less

Where the owner does not comes forward for payment of such penalty

· 50% of the value of the goods or 200% of the tax payable on such goods, whichever is higher,

· in case of exempted goods, amount equal to 5% of the value of goods or Rs. 25,000, whichever is less

The amendment is made to remove the deficiency as no tax could be collected by the intercepting officer without establishing supply. To avoid the exercise of alleging supply, tax has been removed and penalty has been enhanced under Section 129. Further, provision allowing release of goods on furnishing of security in place of payment of such amount has been abolished. Thus, the amount for release shall now be required to be made by debiting electronic cash ledger (ITC cannot be used for payment of penalty).

Further, process for release of goods under Section 129 has been delinked from Section 67 and also Section 130.

Section 130 delinked from Section 129

Section 130 has been amended to delink the penalty leviable therein from Section 129.

VI. Liability shown in GSTR-1 liable for recovery without SCN

Amendment:

An explanation to sub-section (12) of section 75 of the CGST Act is being inserted to clarify that “self-assessed tax” shall include the tax payable in respect of outward supplies, the details of which have been furnished under section 37, but not included in the return furnished under section 39.

Analysis:

Earlier Section 75(12) suffered from a technical handicap that amount declared under GSTR-1 was not falling within its purview as self assessed tax which could be recovered without any SCN from the taxpayer being declared by such tax payer. In case of Kabeer Reality P. Ltd.[3], hon’ble High Court upheld the action of department of initiating recovery without determing tax under Section 73/74 as the tax was duly declared and accepted by taxpayer in his GSTR-1. The present amendment fortifies all arguments against a taxpayer who declares a outward liability in GSTR-1 but fails to pay the same in GSTR 3B. It is important to note that this is a recovery provision and does not need a retrospective amendment and thus, recovery proceedings may be initiated directly in such cases even for past period by department. This retrospective operation though shall be tested in the court of law.

VII. Scope of provisional attachment enhanced

Amendment:

Section 83 of the CGST Act is being amended so as to provide that provisional attachment shall remain valid for the entire period starting from the initiation of any proceeding under Chapter XII, Chapter XIV or Chapter XV till the expiry of a period of one year from the date of order made thereunder.

Analysis:

Section 83 has been amended to enhance the power of provisional attachment. The Section has been amended to allow provisional attachment in cases where the proceedings have been initiated under any of following chapters:

· Chapter XII : Assessment

· Chapter XIV: Inspection, search, seizure & Arrest

· Chapter XV : Demand and recovery

Thus, in place of specified sections, entire Chapters have been prescribed to enlarge the scope of proceedings under which provisional attachment of property can be made. Thus, while earlier the provisions listed were more of those undertaken to check tax evasions (inspection, search, seizure, adjudication of SCN), the amended provision provides for such coercive measure in case of regular proceedings in case of regular taxpayers like scrutiny of returns, assessment of non filers, access to business premises etc. Thus, this may find misapplication in certain cases also.

The powers has been expanded even for the provisional attachment of property of a person specified under Section 122(1A) viz., at whose instance the fake transactions have been conducted and who retains the benefit of transactions relating to fake invoices, false ITC etc. However, the provision fails to provide as to how such person shall be covered as a person against whom a proceeding under the above mentioned sections shall be said to initiated to instigate provisional attachment. Thus, the provision may not be effective to instigate provisional attachment in such cases.

VIII. Pre deposit required for appeal against detained goods in transit

Amendment:

A proviso to sub-section (6) of section 107 of the CGST Act is being inserted to provide that no appeal shall be filed against an order made under sub-section (3) of section 129, unless a sum equal to twenty-five per cent. of penalty has been paid by the appellant.

Analysis:

Appeal against order of detention and seizure of goods in transit can now be made only after making pre deposit of 25% of penalty as levied under Section 129.

IX. More power to call and use information

Amendment:

· Section 151 of the CGST Act is being substituted to empower the jurisdictional commissioner to call for information from any person relating to any matter dealt with in connection with the Act.

· Section 152 of the CGST Act is being amended so as to provide that no information obtained under sections 150 and 151 shall be used for the purposes of any proceedings under the Act without giving an opportunity of being heard to the person concerned.

· Section 168 of the CGST Act is being amended to enable the jurisdictional commissioner to exercise powers under section 151 to call for information.

Analysis:

Section 151 has been amended to replace the power to collect statistics with power to collect information. The amended Section reads as under:

Power to call for information.

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.”.

The amended Section provides that Commissioner or any officer authorized by him direct any person to furnish information relating to any matter dealt with in connection with this Act. The power can be exercised on any person and in respect of any information relating to any matter dealt with in connection with this Act. This is a very wide power and allows officer to call for any information like call records from telecommunication authority (though guidelines issued in this regard may need to be followed), detail of money transaction from banks in any account, construction records from Municipal bodies, records of transactions from any website, purchase details of its customers from any supplier etc. There may be some collision with privacy laws or other laws[4] in certain cases which may require issuance of guidelines for officers to follow for calling sensitive information from certain persons dealing with public information. However, it is a trite law that the right to privacy can be restricted if there is a compelling state interest to be served (Govind v. State of M.P.[5]).

Section 152 has been amended to allow use of such information so collected against a person after affording him an opportunity of being heard. Thus, information collected from different sources may be used to confirm and recover tax after affording reasonable opportunity of being heard to the person against whom such information is being used.

X. Refund on Zero Rated Supply – restricted

Amendment:

Section 16 of the IGST Act is being amended so as to:

(i) zero rate the supply of goods or services to a Special Economic Zone developer or a Special Economic Zone unit only when the said supply is for authorised operations;

(ii) restrict the zero-rated supply on payment of integrated tax only to a notified class of taxpayers or notified supplies of goods or services; and

(iii) link the foreign exchange remittance in case of export of goods with refund.

Analysis:

Section 16 of IGST Act has been amended to limit the option of making export with payment of duty. The option is not made limited to notified class of goods or suppliers. Thus, in all cases refund shall be available to persons of tax paid on inward supplies. Also, this would take away the benefit of claiming refund of tax paid on capital goods by way of using such tax for payment of IGST and claiming refund of such IGST so paid.

Secondly, supply to SEZ units or developers shall qualify as Zero rated supply only when the same is made for authorised operations. Accordingly, the zero rated supply has now been reserved to the list of services used for authorised operations only.

Further, any person who has received refund but yet not received the payment against the export shall also be required to deposit the refund so received along with the applicable interest under section 50 of the CGST Act within 30 days after the expiry of the time limit prescribed under the FEMA, for receipt of foreign exchange remittances. Whether the provision shall be used to recover refunds so granted in past shall be seen in coming days.

Changes in Customs

I. IGCR amended to promote inbound job work

Amendment:

Customs (Import of Goods at Concessional Rate of Duty) Rules, 2017 [IGCR Rules] are being amended to provide the following facilities:

a. to allow job-work of the materials (except gold and jewellery and other precious metals) imported under concessional rate of duty

b. to allow 100% out-sourcing for manufacture of goods on job-work

c. to allow imported capital goods that have been used for the specified purpose to be cleared on payment of differential duty, along with interest, on the depreciated value. The depreciation norms would be the same as applied to EOUs, as per Foreign Trade Policy.

II. Export goods on fake invoices penalized

Amendment:

Section 114AC has been inserted in Customs Act to provide that where any person has obtained any invoice by fraud, collusion, willful misstatement or suppression of facts to utilize input tax credit on the basis of such invoice for discharging any duty or tax on goods that are entered for exportation under claim of refund of such duty or tax, such person shall be liable for penalty not exceeding five times the refund claimed.

The provision aims to penalize all persons intending to obtain refunds on the basis of fake invoices. The enforcement of this penalty under Customs Act may however find challenge in court of law.

III. Other changes

High Speed Rail Projects are being included in list of projects to which Project Imports Scheme is applicable

National High Speed Rail Corporation Ltd. is being nominated as the “Sponsoring Authority” under Project Import Regulations, 1986 for approving the items required to be imported under the Project Imports Scheme for High-Speed Rail Projects

Review of levy of Social Welfare Surcharge on various items

Miscellaneous changes have been brought in the provisions pertaining to Anti-Dumping Duty (ADD)/ Countervailing Duty (CVD)/ Safeguard Measures

I. Introduction of Agriculture Infrastructure and Development Cess

P	Amendment: An Agriculture Infrastructure and Development Cess (AIDC) has been proposed on import of specified goods. To ensure that imposition of cess does not lead to additional burden in most of these items on the consumer, the BCD rates has been lowered. This cess shall be used to finance the improvement of agriculture infrastructure and other development expenditure. The list of items on which cess has been imposed and the applicable duty and AIDC on them would be as follows:
		S. No	Heading, sub-heading tariff item	Commodity			Basic customs duty	AIDC
		1.	0808 10 00	Apples			15%	35%
		2.	1511 10 00	Crude Palm Oil			15%	17.5%
		3.	1507 10 00	Crude Soya-bean oil			15%	20%
		4.	1512 11 10	Crude Sunflower seed oil			15%	20%
		5.	0713 10	Peas (Pisum sativum)			10%	40%
		6.	0713 20 10	Kabuli Chana			10%	30%
		7.	0713 20 20	Bengal Gram (desichana)			10%	50%
		8.	0713 20 90	Chick Peas (garbanzos)			10%	50%
		9.	0713 40 00	Lentils (Mosur)			10%	20%
		10.	2204	All goods (Wine)			50%	100%
		11.	2205	Vermouth and other wine of fresh grapes, flavoured			50%	100%
		12.	2206	Other fermented beverages for example, Cider, Perry, Mead, sake, mixture of fermented beverages or fermented beverages and nonalcoholic beverages			50%	100%
		13.	2208	All goods (Brandy, Bourbon whiskey, Scotch etc.)			50%	100%
		14.	2701	Various types of coal			1%	1.5%
		15.	2702	Lignite, whether agglomerated	or	not	1%	1.5%
		16.	2703	Peat, whether agglomerated	or	not	1%	1.5%
		17.	3102 10 00	Urea			Nil	5%
		18.	3102 30 00	Ammonium nitrate			2.5%	5%
		19.	31	Muriate of potash, for use as manure or for the production			Nil	5%
				of complex fertilisers
		20.	3105 30 00	Diammonium phosphate, for use as manure or for the production of complex fertilisers			Nil	5%
		21.	5201	Cotton (not carded or combed)			5%	5%
		22.	7106	Silver (including imports by eligible passengers)			7.5%	2.5%
		23.	7106	Silver Dore			6.1%	2.5%
		24.	7108	Gold (including imports by eligible passengers)			7.5%	2.5%
		25.	7108	Gold Dore			6.9%	2.5%

II. Rate Changes – Customs

	AMENDMENTS
A.	*Tariff rate changes for Basic Customs Duty [to be effective from 02.02.2021, unless otherwise specified] [Clause [95 (i) ] of the Finance Bill, 2021]**				Rate of Duty
S. No.	Heading, sub-heading tariff item		Commodity		From		To
			Chemicals
1.	2803 00 10		Carbon Black		5%		7.5%
			Plastic items
2.	3925		Builder‟s ware of Plastics		10%		15%
			Gems and Jewellery Sector
3.	7104		Cut and Polished Synthetic stones, including Cut and Polished Cubic Zirconia		10%		15%
			Electrical and Electronics Sector
4.	8414 30 00		Compressors equipment of a kind used in refrigerating		12.5%		15%
5.	8414 80 11		Compressors of a kind used in air-conditioning equipment		12.5%		15%
6.	8504 90 90		Printed Circuit Board Assembly [PCBA] of charger or adapter (All goods under this tariff item, other than above, will continue to attract the existing effective rate of BCD at 10%)		10%		15%
			Parts of Automobiles
7.	7007		Safety glass, consisting of toughened (tempered) or laminated glass. (All goods under this heading, other than those used with motor vehicles, will continue to attract the existing effective rate of BCD at 10%)		10%		15%
8.	8512 90 00		Parts of Electrical lighting and signaling equipment, windscreen wipers, defrosters and demisters, of a kind used for cycles or motor		10%		15%
		vehicles
9.	8544 30 00	Ignition wiring sets and other wiring sets of a kind used in vehicles, aircraft or ships		10%		15%
10.	9104 00 00	Instrument Panel Clocks and Clocks of a similar type for vehicles, Aircraft, Spacecraft or Vessels		10%		15%
B.	Tariff rate changes (without any change in the effective rates of Basic Customs Duty)			Rate of Duty
S. No.	Heading, sub-heading tariff item	Commodity		From		To
1.	8414 40	Air compressors mounted on a wheeled chassis for towing		7.5%		15%
2.	8414 80 (except 8414 80 11)	Gas Compressors (other than of a kind used in air- conditioning equipment), free-piston generators for gas turbine, turbo charger and other compressors		7.5%		15%
3.	8501 10 to 8501 53	Electric Motors		10%		15%
4.	8536 41 00 and 8536 49 00	Relays		10%		15%
5.	8537	Boards, panels, consoles, etc. for electric control or distribution of electricity		10%		15%
6.	9031 80 00	Other instruments, appliances and machines		7.5%		15%
7.	9032 89	Electronic automatic regulators and other controlling instruments or apparatus		10%		15%
C.	New entries added to the First Schedule [Clause 95 (ii) and 95 (iii) of the Finance Bill, 2021]
1.	Harmonizing the Customs Tariff Act 1975 with the HSN 2022 a) Changes to the first schedule to the Customs Tariff Act are being proposed that are to come into effect from 01.01.2022. This is in accordance with HSN 2022, which proposes 351 amendments to the existing harmonized nomenclature, covering a wide range of goods moving across borders. b) The amendments are necessary to adapt to the current trade through the recognition of new product streams, the changing nature of commodities being traded, advent of new technologies and addressing the environmental and social issues of global concern- all with a prime focus on the larger goal of ease of doing business and trade facilitation.
2.	New tariff lines under the heading 2709 in the Customs Tariff Act, 1975 (Will come into effect on 1.4.2021): 2709 00 10 — petroleum crude 2709 00 20 — other

Other Rate amendments:

	AMENDMENTS
A.	*Tariff rate changes for Basic Customs Duty [to be effective from 02.02.2021, unless otherwise specified] [Clause [95 (i) ] of the Finance Bill, 2021]**								Rate of Duty
S. No.	Heading, sub-heading tariff item	Commodity							From	To
		Chemicals
1.	2803 00 10	Carbon Black							5%	7.5%
		Plastic items
2.	3925	Builder‟s ware of Plastics							10%	15%
		Gems and Jewellery Sector
3.	7104	Cut and Polished Synthetic stones, including Cut and Polished Cubic Zirconia							10%	15%
		Electrical and Electronics Sector
4.	8414 30 00	Compressors equipment	of	a	kind	used	in	refrigerating	12.5%	15%
5.	8414 80 11	Compressors of a kind used in air-conditioning equipment							12.5%	15%
6.	8504 90 90	Printed Circuit Board Assembly [PCBA] of charger or adapter (All goods under this tariff item, other than above, will continue to attract the existing effective rate of BCD at 10%)							10%	15%
		Parts of Automobiles
7.	7007	Safety glass, consisting of toughened (tempered) or laminated glass. (All goods under this heading, other than those used with motor vehicles, will continue to attract the existing effective rate of BCD at 10%)							10%	15%
8.	8512 90 00	Parts of Electrical lighting and signaling equipment, windscreen wipers, defrosters and demisters, of a kind used for cycles or motor							10%	15%

OTHER PROPOSALS INVOLVING CHANGES IN BASIC CUSTOMS DUTY RATES IN RESPECTIVE NOTIFICATIONS [with effect from 2.2.2021, unless specified otherwise]

S. No

Chapter, Heading, sub- heading, tariff item

Commodity

From

Agricultural Products and By Products

2207 20 00

Denatured Ethyl Alcohol (ethanol) for use in manufacture of excisable goods

2.5%

All goods except dog and cat food and shrimp larvae feed

Nil/ 5%/

10%/

15%/

20%/

30%

15%

Minerals

2528

Natural borates and concentrates thereof

Nil/5%

2.5%

Fuels, Chemicals and Plastics

2710

Naphtha

2.5%

2907 23 00

Bis-phenol A

Nil

7.5%

2910 30 00

Epichlorohydrin

2.5%

7.5%

2933 71 00

Caprolactam

7.5%

3907 40 00

Polycarbonates

7.5%

3908

Nylon chips

7.5%

10.

3920 99 99

Other plates, sheets, films, etc. of other plastics

10%

15%

Leather

Wet blue chrome tanned leather, crust leather, finished leather of all kinds, including splits and sides of the aforesaid

Nil

10%

Textiles

12.

5002

Raw Silk (not thrown)

10%

15%

13.

5004, 5005,

5006

Silk yarn, yarn spun from silk waste (whether or not put up for retail sale)

10%

15%

14.

5201

Raw Cotton

Nil

5% +

5% AIDC*

15.

5202

Cotton waste (including yarn waste or garneted stock)

Nil

10%

16.

5402, 5403,

5404, 5405

00 00, 5406,

5501 to 5510

Nylon Fibre and Yarn

7.5%

Gems and Jewellery Sector

17.

7106

Silver

12.5.%

7.5%+

2.5% AIDC*

18.

7106

Silver Dore

11%

6.1% +

2.5% AIDC*

19.

7108

Gold

12.5%

7.5%+

2.5% AIDC*

20.

7108

Gold Dore

11.85%

6.9%+

2.5% AIDC*

21.

7107 00 00,

7109 00 00,

7111 00 00

Base metals or precious metals clad with precious metals

12.5%

10%

22.

7110

Other precious metals like Platinum, Palladium, etc.

12.5%

10%

23.

7112

Waste and scrap of precious metals or metals clad with precious metals

12.5%

10%

24.

7112

Spent catalyst or ash containing precious metals

11.85%

9.17%

25.

7113

Gold or Silver Findings

20%

10%

26.

7118

Coin

12.5%

10%

Metals

27.

7204

Iron and steel scrap, including stainless steel scrap [up to 31.03.2022]

2.5%

Nil

28.

7206 and

7207

Primary/Semi-finished products of non-alloy steel

10%

7.5%

29.

7208, 7209,

7210, 7211,

7212, 7225

(except 7225

11 00) and

7226 (except

7226 11 00)

Flat products of non-alloy and alloy steel

10%

/12.5%

7.5%

30.

7213, 7214,

7215, 7216,

7217, 7221,

7222, 7223,

7227 and

7228

Long product of non-alloy, stainless and alloy steel

10%

7.5%

31.

7225

Raw materials for use in manufacture of CRGO steel [up to 31.03.2023]

2.5%

Nil

32.

7404

Copper Scrap

2.5%

33.

7318

Screw, bolts, nuts, etc. of iron and steel

10%

15%

Capital Goods

34.

8430

Tunnel boring machines

Nil

7.5%

35.

8431

Parts and components for manufacture of tunnel boring machines with actual-user condition

Nil

2.5%

IT, Electronics and Renewable

36.

8544 (other

than 8544 70

and 8544 30

00)

Specified insulated wires and cables

7.5%

10%

37.

39, 74 and

Former, bases, bobbins, brackets; CP wires; P.B.T.; Phenol resin moulding powder; Lamination/ El silicon steel strips for use in manufacture of transformers (entry at S.No. 198 of 25/1999- Customs)

Nil

Applicable rate

38.

Any Chapter

Inputs or parts for manufacture of Printed Circuit Board Assembly (PCBA) of cellular mobile phone

(w.e.f. 1.4.2021)

Nil

2.5%

39.

Any Chapter

Inputs or parts for manufacture of camera module of cellular mobile phone

(w.e.f. 1.4.2021)

Nil

2.5%

40.

Any Chapter

Inputs or parts for manufacture of connectors of cellular mobile phone

(w.e.f. 1.4.2021)

Nil

2.5%

41.

Any Chapter

Inputs or raw material for manufacture of specified parts like back cover, side keys etc. of cellular mobile phone

(w.e.f. 1.4.2021)

Nil

2.5%

42.

Any Chapter

Inputs or raw material (other than PCBA and moulded plastics) for manufacture of charger or adapter of cellular mobile phones

Nil

10%

43.

8504 90 90

3926 90 99

Moulded plastics for manufacture of charger or adapter

10%

15%

44.

Any Chapter

Inputs or parts of Printed Circuit Board Assembly of charger or adapter of cellular mobile phones

Nil

10%

45.

Any Chapter

Inputs or parts of Moulded Plastic of charger or adapter of cellular mobile phones

Nil

10%

46.

Any Chapter

Inputs or raw materials (other than Lithium-ion cell and PCBA) of Lithium-ion battery or battery pack

(w.e.f. 1.4.2021)

Nil

2.5%

47.

Any Chapter

Parts or components of PCBA of Lithium-ion battery or battery pack

(w.e.f. 1.4.2021)

Nil

2.5%

48.

Any Chapter

Inputs or raw materials of following goods: –

(i) Other machines capable of connecting to an automatic data processing machine or to a network (8443 32 90)

(ii) Ink cartridges, with print head assembly (8443 99 51)

(iii) Ink cartridges, without print head assembly (8443 99 52)

(iv)Ink spray nozzle (8443 99 53) (w.e.f. 1.4.2021)

Nil

2.5%

49.

Any Chapter

Inputs and parts of LED lights or fixtures including LED Lamps

10%

50.

Any Chapter

Inputs for use in the manufacture of LED driver or MCPCB (Metal Core Printed Circuit Board) for LED lights or fixtures including LED Lamps

10%

51.

9405 50 40

Solar lanterns or solar lamps

15%

52.

8504 40

Solar Inverters

20%

53.

9503

Parts of Electronic Toys for manufacture of electronic toys

15%

Aviation Sector

54.

Any Chapter

Components or parts, including engines, for manufacture of aircrafts or parts of such aircrafts, by Public Sector Units under Ministry of Defence subject to condition specified.

2.5%

Medical devices

55.

9018-9022

Medical Devices imported by International Organization and Diplomatic Missions

Health Cess @ 5%

Health Cess @ Nil

Goods imported under Project Import Scheme

56.

9801

High Speed Rail Projects being brought under project imports

Applica ble Rate

57.

8714 91 00,

8714 92,

8714 93,

8714 94 00,

8714 95,

8714 96 00,

8714 99

All goods other than Bicycle parts and components

10%

15%

III. Withdrawal of BCD concessions/ exemptions

The BCD exemption hitherto available on certain goods are being withdrawn by omitting following entries of notification No. 50/2017-Customs dated 30.6.2017.

S. No.	S. No. of Notfn	Description/ CTH
1.	209	Diphenylmethane 4, 4-diisocyanate (MDI) for use in the manufacture of spandex yarn
2.	230	Ink cartridges, ribbon assembly, ribbon gear assembly, ribbon gear carriage, for use in printers for computers
3.	229 [w.e.f 1.4.2021]	71 items like wax items, wood polish materials, prints for photo frames, velvet fabric/paper, handles/blades for cutlery, jigat, wine tools etc.
4.	311 [w.e.f 1.4.2021]	35 items like fasteners, zippers, shoulder pads, buckles, rivets, Velcro tape, toggles, stud, elastic cloth and band, bobbin, hooks, anglets etc.
5.	312	42 items like buckles, buttons, stamping foil, sewing thread,
	[w.e.f 1.4.2021]	Loop rivets, Glove Liners, shoe laces, inlay cards etc.
6.	313 [w.e.f 1.4.2021]	18 items like lace, Velcro tape, curtain hooks, Tassel, Beads, Sequins, sewing threads, poly wadding materials, quilted wadding materials etc.

Customs duty exemptions, including those which have been granted through certain other stand-alone notifications, have also been reviewed by rescinding the notification:

S. No.	Notification No.	Notification Subject
1.	1/2011-Customs, dated the 6.1.2011	Exemption to all items of machinery, instruments, appliances, components or auxiliary equipment for initial setting up of solar power generation project or facility
2.	34/2017- Customs dated 30^th June, 2017	This notification provided exemption to tags or labels (whether made of paper, cloth, or plastic), or printed bags (whether made of polyethene, polypropylene, PVC, high molecular or high density polyethene) imported for fixing on articles for export or for the packaging of such articles. Similar exemption exists at S. No.257 of notification No. 50/2017-Cus. These have been merged in the said S. No.257 and notification No 34/2017-Cus has been omitted.
3.	75/2017- Customs dated 13^th September, 2017	Exemption for goods imported for organizing FIFA Under-17 World Cup, 2017.

III. Rate changes on Petrol and Diesel – Excise

Consequent to imposition of AIDC, the Basic Excise Duty (BED) and Special Additional Excise Duty (SAED) on Petrol and High-speed diesel is being reduced so that consumer does not have to bear any additional burden on account of imposition of AIDC. The revised duty structure on petrol and HSD shall be as follows.

A	Item	BED (Rs/Ltr)	SAED (Rs/Ltr)	AIDC (Rs/Ltr)
1	Petrol (unbranded)	1.4	11	2.5
2	Petrol (branded)	2.6	11	2.5
3	High speed diesel (unbranded)	1.8	8	4
4	High speed diesel (branded)	4.2	8	4

III. Imposition of Agriculture Infrastructure And Development Cess (AIDC) on Petrol and Diesel – Excise

An Agriculture Infrastructure and Development Cess (AIDC) as an additional duty of excise has been proposed on Petrol and High speed diesel vide Clause [116] of the Finance Bill, 2021. This cess shall be used to finance the improvement of agriculture infrastructure and other development expenditure. The details of the cess are as under:

S. No.	Commodity	Rate of AIDC [Clause [116] of the Finance Bill, 2021]*
1	Motor spirit commonly known as petrol	Rs. 2.5 per litre
2	High speed diesel	Rs. 4 per litre

*Will come into effect immediately owing to a declaration under the Provisional Collection of Taxes Act, 1931.

About the Author

Adv. Gaurav Gupta is a graduate from Sri Ram College of Commerce, Delhi University and a Law Graduate from Delhi University. He is a fellow member of Institute of Chartered Accountants of India. He has completed his ISA post qualification course of Institute of Chartered Accountants of India. He has completed his doctorate in Taxation from Ecole Superieure Robert de Sorbon, University of France.

He is also author to books on many titles on GST including Goods and Services Tax – Law & Practise, Handbook on GST – Law & Practise, GST Handguide for Practitioners, GST Manual, GST Referencer and Manual (co-author), Audit and Annual Returns in GST (co-author) etc. He has authored books on Service tax titles “Service Tax – Law & Practice” and Service Tax Ready Reckoner. He has contributed to various publications of Indirect Tax Committee of Institute of Chartered Accountants of India and has Co authored Compendium on all Notifications, Circulars, Orders & clarifications and Determinations in Delhi Value Added Tax Act, 2004. He is author of online resource on GST – www.gstindiaguide.com.

He is a special invitee to the Indirect Tax Committee of ICAI for FY 2012, 2014, 2015, 2017, 2018,2019. He was Co-Chairman of Indirect Tax Committee, PhD Chamber of Commerce for FY 2019-20. He was also member of managing Committee of Indirect Tax Practitioners Association, Chhattisgarh, Raipur, India and member of Committees of Sales Tax Bar Association, 2016,2018, 2019. He has been Joint Secretary, Sales Tax Bar Association, Delhi, India for FY 2014 and Ex-Senior Advisor to World Association of Small and Medium Enterprises. He is also a member executive of STBA for FY 2021. He has been Convener of Delhi Study Group on GST, ICAI, 2016 and Member, Indirect Tax Committee, ASSOCHAM. He is also an executive member of Society for Tax Analysis and Research.

He has Addressed more than 600 seminars on Indirect taxes in various forums, seminars, conference etc organized by professional bodies and association including PhD Chamber of Commerce, Institute of Chartered Accountants of India, Institute of Company Secretaries of India, Sales Tax Bar Association, National Chamber of Commerce and Industry, Southern Gujarat Commercial Tax Bar Association etc. He is also a faculty on GST and Indirect Tax organised by Institute of Chartered Accountants of India, GST Commissionerates etc.

He has been partner in MGS & Co., Chartered Accountants, Delhi before practising as an Advocate. He has more than 18 years of experience in indirect taxation during which I was extensively involved in advising multinationals and domestic companies across a range of sectors such as Infrastructure, Power, Education, Medical, Telecommunication, Broadcasting, IT, FMCG, Financial Services etc. and specialises in handling enforcements, audits, litigations matters in Indirect Taxes of India. He has also worked as Head – Taxation of a Listed Group and with a Tier 1 consulting firms in Indirect tax space and had worked on assignments involving provision of opinion and consulting to Fortune 500 companies.

[1] Civil Appeal No.4184 of 2009

[2] Clause 366(29A)(f) of the Constitution read as under:

(f) a tax on the supply, by way of or as part of any service or in any other manner whatsoever, of goods, being food or any other article for human consumption or any drink (whether or not intoxicating), where such supply or service, is for cash, deferred payment or other valuable consideration, and such transfer, delivery or supply of any goods shall be deemed to be a sale of those goods by the person making the transfer, delivery or supply and a purchase of those goods by the person to whom such transfer, delivery or supply is made;

[3] [[2019] 112 taxmann.com 80 (Madhya Pradesh)]

[4] Information Technology Act, 2000 (the “IT Act”) and the Indian Telegraph Act, 1885

[5] 1975 AIR 1378

Indirect Tax Proposals in Finance Bill 2021

Changes in GST

I. Levy on Clubs, societies etc.

II. ITC available after Supplier uploads detail in GSTR-1

III. No more GST Audit by professionals

IV. Interest payable on tax paid by Cash ledger only

V. Amendments in provision relating to detention / confiscation of goods in transit

VI. Liability shown in GSTR-1 liable for recovery without SCN

VII. Scope of provisional attachment enhanced

VIII. Pre deposit required for appeal against detained goods in transit

IX. More power to call and use information

X. Refund on Zero Rated Supply – restricted

Changes in Customs

I. IGCR amended to promote inbound job work

II. Export goods on fake invoices penalized

III. Other changes

I. Introduction of Agriculture Infrastructure and Development Cess

II. Rate Changes – Customs

III. Withdrawal of BCD concessions/ exemptions

III. Rate changes on Petrol and Diesel – Excise

III. Imposition of Agriculture Infrastructure And Development Cess (AIDC) on Petrol and Diesel – Excise

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