Bhatia & Bhatia

Chartered Accountants

Tax Alert
GST Alert on GST
Amendment Act

GST Amendment Act, 2018 to be made applicable from 1st February, 2019

The President of India gave assent on 29th August 2018 to make amendments to following GST laws:

 The Central Goods and Services Tax (Amendment) Act 2018

 The Integrated Goods and Services Tax (Amendment) Act 2018
 The Union Territory Goods and Services Tax (Amendment) Act 2018
 The Goods and Services Tax (Compensation to States) Amendment Act 2018.

The GST council has announced through the press release that the effective date of applicability of
amendments in GST Act(s) 2018 will be from 1st February, 2019
1. Section 2(102): Definition of Services
Earlier Definition: “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 Definition: “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;
Explanation: For the removal of doubts, it is hereby clarified that the expression “services” includes
facilitating or arranging transactions in securities.
Comments
This explanation provides clarity that although ‘securities’ [section 2(h) of Securities Contract Regulations
Act, 1956] are excluded from the definition of ‘goods’ and ‘services’ in the CGST Act, but if some service
charges or service fees or documentation fees or broking charges or such like fees or charges are charged in
relation to transactions in securities, the same would be a consideration for provision of service and
chargeable to GST.
2. Section 7: Scope of supply
Earlier section:
For the purposes of this Act, the expression “supply” includes––
a. all forms of supply of goods or services or both such as sale, transfer, barter, exchange,
licence, rental, lease or disposal made or agreed to be made for a consideration by a person
in the course or furtherance of business;
b. import of services for a consideration whether or not in the course or furtherance of business;
c. the activities specified in Schedule I, made or agreed to be made without a consideration; and
d. the activities to be treated as supply of goods or supply of services as referred to in Schedule
II.
Amended section:
For the purposes of this Act, the expression “supply” includes––
a. all forms of supply of goods or services or both such as sale, transfer, barter, exchange,
licence, rental, lease or disposal made or agreed to be made for a consideration by a person
in the course or furtherance of business;
b. import of services for a consideration whether or not in the course or furtherance of business
and;
c. the activities specified in Schedule I, made or agreed to be made without a Consideration;
d. deleted

Newly inserted 7(1A): “ where certain activities or transactions constitute a supply in accordance with the
provisions of sub-section (1), they shall be treated either as supply of goods or supply of services as referred
to in Schedule II ”

Comments:
Retrospective application w.e.f. 01.07.2017
Term ‘supply’ is amended to exclude activities/ transactions listed in Schedule II to ensure that the activities/
transactions as per Schedule II is to determine only whether the same is supply of goods or services. Hence,
activities/ transactions listed in Schedule II (as supply of service or supply of goods) shall be taxed only when
they constitute ‘supply’ in accordance with provisions of Section 7(1)(a), (b) and (c) of the CGST Act.
Amendments in definition of ‘supply’ are made retrospectively applicable. Thus, there shall not be any past
litigation on account of any transaction merely covered under Schedule II, but otherwise not a ‘supply’.

3. Section 10 – Composition Scheme

Section 10 has been amended to increase threshold limit for the composition suppliers from INR 1 crore to
1.5 crores and further to enable registered manufacturers and traders to opt for composition scheme u/s
10(1) of the CGST Act even if they supply services of value not exceeding 10% of the turnover in a
State/Union territory in the preceding FY or INR 5 lakhs, whichever is higher [Presently, registered persons
engaged in the supply of services (other than restaurant services) are not eligible for the composition
scheme]
The amendment also allows supply of services to the extent of above specified limits, apart from services
referred in Para 6(b) of Schedule II i.e. restaurant services.
4. Section 17: Apportionment of credit and blocked credit
Notwithstanding anything contained in sub-section (1) of section 16 and sub section(1) of section 18, input
tax credit shall not be available in respect of the following namely:

Replaced clauses

a) motor vehicles for transportation of persons having approved seating capacity of not more
than thirteen persons (including the driver), except when they are used for making the
following taxable supplies, namely:-
A. further supply of such motor vehicles; or
B. transportation of passengers; or
C. imparting training on driving such motor vehicles;
aa) vessels and aircraft except when they are used:-
i. for making the following taxable supplies, namely:
A. Further supply of such vessels or aircrafts
B. Transportation of such passengers
C. Imparting training on navigating such vessels
D. Imparting training on flying such aircraft
ii. For transportation of goods
ab) services of general insurance, servicing, repair and maintenance in so far as they relate to
motor vehicles, vessels or aircraft referred to in clause (a) or clause (aa)

Proviso:
Provided that the input tax credit in respect of such services shall be available—
i. where the motor vehicles, vessels or aircraft referred to in clause (a) or clause (aa) are
used for the purposes specified therein;
ii. where received by a taxable person engaged-
I. In manufacture of such motor vehicles, vessels or aircraft or
II. In supply of general insurance services in respect of such motor vehicles, vessels
or aircraft insured by him

Comments
Now, ITC is restricted only to the extent of motor vehicles for transportation of persons having
approved capacity of not more than 13 persons (including the driver) unless used for specified
purposes;
Reference of ‘other conveyances’ while disallowing credit on motor vehicles has been omitted. This
amendment makes it clear that ITC would now be available in respect of dumpers, work-trucks, fork-lift
trucks and other special purpose motor vehicles;
Separate entry is created for vessel and aircrafts in clause (aa) – No credit shall be available on vessels
and aircrafts except when used for specified purposes under clause (aa);
 It is clarified that no ITC shall be available for services of general insurance, servicing, repair and
maintenance in so far as they relate to motor vehicles, vessels and aircraft for which the credit is not
available;
But, ITC on services of general insurance, servicing, repair and maintenance on motor vehicles, vessels
or aircraft is allowed to manufacturer of such motor vehicles, vessels or aircraft and to those engaged
in supply of general insurance services in respect of such motor vehicles, vessels or aircraft.

b) The following supply of goods or services or both:

i. food and beverages, outdoor catering, beauty treatment, health services, cosmetic and
plastic surgery, leasing, renting or hiring of motor vehicles, vessels or aircraft referred to in
clause (a) or clause (aa) except when used for the purposes specified therein, life insurance
and health insurance
Proviso:
Provided that the input tax credit in respect of such goods or services or both shall be
available where an inward supply of such goods or services or both is used by a registered
person for making an outward taxable supply of the same category of goods or services or
both or as an element of a taxable composite or mixed supply

ii. membership of a club, health and fitness centre; and

iii. travel benefits extended to employees on vacation such as leave or home travel concession

Proviso:
Provided that the input tax credit in respect of such goods or services or both shall be
available, where it is obligatory for an employer to provide the same to its employees under
any law for the time being in force.”

Comments
ITC in respect of food and beverages, health services, renting or hiring of motor vehicles, vessels and
aircraft, travel benefits to employees etc., can be availed where the provision of such goods or
services is obligatory for an employer to provide to its employees under any law for time being in
force.
Further ITC on renting or hiring of motor vehicles, vessels or aircraft is allowed when they are used
for purposes specified in clause (a) or (aa).
5. Section 34 – Debit and Credit Notes

The amendment permit a registered person to issue consolidated credit / debit notes as prescribed under
Section 34 of the CGST Act in respect of multiple invoices issued in a Financial Year without linking the same
to individual invoices.

Comments:
However corresponding changes in Rule 53 of the CGST Rules shall also be required which prescribes
corresponding invoice number and date of invoice as one of the mandatory particulars on debit and
credit notes. Further, suitable amendments in return format is also required.

6. Section 35(5): GST Audit

New proviso to this section 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.”.

7. Section 39(9)- Furnishing of returns

Rectification of errors in returns is made subject to the form & manner to be prescribed.

8. Section 49A: Utilization of input tax credit subject to certain conditions:

Newly inserted: This Section seeks to specify that a taxpayer would be able to utilize the input tax
credit on account of central tax, State tax or Union territory tax only after exhausting all the credit on
account of integrated tax available to him towards payment or integrated tax, Central tax, State tax or
Union territory tax.

9. Sec 49 (5)(c) & (d) – Payment of Tax

Clauses (c) and (d) to Section 49(5) are amended to provide that the credit of SGST/ UTGST can be utilized
for payment of IGST only when the balance of the input tax credit on account of CGST is not available for
payment of IGST.

10. Schedule III of CGST Act 2017

Newly inserted paras:
Following activities or transactions which shall be treated neither as a supply of goods nor a supply of
services
1. Supply of goods from a place in the non-taxable territory to another place in the non-taxable territory
without such goods entering into India.
2. (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.
 About us:
Bhatia & Bhatia, Chartered Accountant was set up
Our Office in the year 1981 by Mr. Ravinder Bhatia & Mr.
Ashok Kumar Bhatia. Over the last three decades
New Delhi: and more, we have gained reputation as a practice
which does not compromise on the quality of the
81, HemkuntColony services. Our firm’s professional work is spread all
Level One, Opp. over the country and abroad, we reach out not
NehruPlace only to the metros and large cities in India but
even to many remote locations. The primary
New Delhi – 110048
service offering of the Firm are: Assurance, Tax
Tele No: +91-11-26475599, 26465599
Advisory, Transfer Pricing, Investment Consultancy
Fax No. +91-11-26425599 and Financial Advisory.

Offices: Mumbai | Bengaluru |Chandigarh |UAE

Disclaimer:

The above information is the summary of recent

development and is not intended to be advice on
any particular matter. Bhatia & Bhatia expressly
disclaim the liability to any person in respect of
anything done in reliance of the content of these
publications. Professional advice should be sought
before taking action on any of the information
contained in it. Without prior permission of Bhatia
& Bhatia, this Alert may not be quoted in whole or
in part or otherwise referred in any documents.