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Introduction
The Hon’ble Finance Minister had presented the Finance Bill 2023 on 1st February 2023 which essentially focused on encouraging domestic manufacturing and gave effect to several decisions taken in the GST Council Meeting. The Finance Bill 2023 which proposed such changes was presented and passed by the Lok Sabha on 24th March 2023.
The Lok Sabha passed the Finance Bill 2023 with 64 official amendments which includes amendments to the Central Goods and Service Tax Act, 2017 (CGST Act), Integrated Goods and Service Tax Act, 2017 (IGST Act) and Customs Act, 1962 (Customs Act) amongst others.
One of the important amendments to the Finance Bill 2023 was the introduction of Section 65A to the Customs Act which places an additional condition on the assessee for goods in relation to which any manufacturing process or other operations are carried out in terms of Section 65 of the Customs Act. Another important amendment was with respect to the constitution of the Goods and Services Tax Appellate Tribunal (GSTAT) by substituting Section 109 and Section 110 of the CGST Act.
The key indirect tax amendments to the Finance Bill 2023, which shall come into force from the date the provisions are notified by the Central Government in the official gazette, are discussed below. (For our comments and an overview of the amendments as originally proposed by the Finance Bill 2023, please refer to our Budget special Ergo edition here.)
Key amendments
Customs:
1. PAYMENT OF IGST AND COMPENSATION CESS ON GOODS STORED FOR MANUFACTURING AND OTHER OPERATIONS IN WAREHOUSE.
Our Comments
Insertion of Section 65A of the Customs Act is purportedly aimed at simplifying the process of levy and collection of IGST and GST Compensation Cess on the deposited goods that are stored in customs bonded warehouses and are undergoing manufacturing or other operations. By levying IGST and GST Compensation Cess at the time of entry of goods to the warehouse, the Government probably aims to ensure that tax liability is determined upfront and that the process of claiming ITC and refunds is streamlined. However, this could cause cash flow issues for several importers/exporters.
The Manufacture and Other Operations in Warehouse Regulations (MOOWR), which was revamped and reintroduced a couple of years ago as an initiative to encourage local manufacturing, might become less rewarding owing to this new Section 65A.
GST:
2. CONSTITUTION OF GOODS AND SERVICE TAX APPELLATE TRIBUNAL
Section 109 of the CGST Act has been substituted for constitution of GSTAT.
Substituted Section 110 provides for qualification and appointment of President and Members
Our Comments
The constitution of GSTAT is not only a welcome move but will also be a great relief to taxpayers – one hopes that the GSTAT starts full-fledged functioning across the country at the earliest.
3. Amendments to Section 62 of the CGST Act
IGST:
4. Omission of Sub-section (9) of Section 13 of the IGST Act
GST (Compensation to States) Act, 2017:
5. Amendment to Schedule of GST (Compensation to States) Act, 2017
The content of this document does not necessarily reflect the views / position of Khaitan & Co but remain solely those of the author(s). For any further queries or follow up please contact Khaitan & Co at [email protected].
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