Central Goods and Services Tax Act, 2017 - Chapter XXI: Miscellaneous

Section 173 of CGST Act - Amendment of Act 32 of 1994

Section 173 of the Central Goods and Services Tax Act, 2017 deals with the omission of Chapter V of the Finance Act, 1994, which contained the central service tax law. The provision formed part of the transition from the earlier service tax regime to GST from 1 July 2017.

Previous: Section 172 CGST Act 2017 Next: Section 174

Text of Section 173 - Amendment of Act 32 of 1994

173. Amendment of Act 32 of 1994.
Save as otherwise provided in this Act, Chapter V of the Finance Act, 1994 shall be omitted.

Meaning of Section 173 of the CGST Act

The expression "Act 32 of 1994" refers to the Finance Act, 1994. Chapter V of that Act was the statutory framework under which service tax was levied and administered before GST. Section 173 therefore omitted that Chapter, subject to provisions of the CGST Act that preserve or regulate specified matters arising under the earlier law.

Effect from 1 July 2017

With the introduction of GST, the earlier service tax framework under Chapter V of the Finance Act, 1994 ceased to operate as the general charging framework for post-GST supplies. However, omission of Chapter V did not erase liabilities, proceedings, rights or obligations arising under the former regime where they are protected by the CGST Act.

Section 173 must be read with Section 174

Section 174 of the CGST Act contains the repeal and saving provisions. Among other matters, it protects the previous operation of the amended or repealed laws and preserves specified rights, obligations, liabilities, taxes, penalties, investigations, assessments, adjudication, recovery proceedings and appeals. Accordingly, Section 173 should not be read as automatically extinguishing matters validly arising under the pre-GST service tax law.

Practical point: For a dispute relating to a pre-GST service tax period, the date of the taxable event, the nature of the proceeding, the applicable saving provision and any specific transitional provision should be examined before concluding that the omission of Chapter V affects the proceeding.

Related transitional provision

The CGST Act also contains transitional provisions dealing with matters connected with the earlier tax laws. For example, Section 142 - Miscellaneous transitional provisions addresses specified claims, refunds, proceedings and other transitional situations.

Key takeaway

Section 173 is the provision by which Chapter V of the Finance Act, 1994 was omitted as part of the introduction of GST. Its legal effect is qualified by the words "Save as otherwise provided in this Act" and by the saving provisions in Section 174. Legacy service tax matters therefore require the relevant saving and transitional provisions to be considered together with Section 173.