Sections 1, 2, 7, 9 and 10 of the CGST Amendment Act, 2018
The Central Goods and Services Tax (Amendment) Act, 2018 (Act 31 of 2018) made significant changes to the Central Goods and Services Tax Act, 2017. This article reproduces and explains the amendments covered by sections 1 to 5 of the 2018 Amendment Act, which concern the short title and commencement and amendments to sections 2, 7, 9 and 10 of the principal CGST Act.
Section 1: Short title and commencement
What it does: Section 1 names the legislation and authorises the Central Government to bring different provisions into force on different notified dates.
1. (1) This Act may be called the Central Goods and Services Tax (Amendment) Act, 2018.
(2) Save as otherwise provided, the provisions of this Act shall come into force on such date as the Central Government may, by notification in the Official Gazette, appoint:
Provided that different dates may be appointed for different provisions of this Act and any reference in any such provision to the commencement of this Act shall be construed as a reference to the coming into force of that provision.
The expression commencement refers to the date from which a statutory provision becomes legally operative. The amendments brought into force in 2019 must therefore be read with the relevant commencement notifications and any provision given retrospective effect.
Section 2: Amendment of definitions in the CGST Act, 2017
Section 2 of the 2018 Amendment Act amended selected definitions in section 2 of the principal CGST Act. In particular, it updated the Board's name to the Central Board of Indirect Taxes and Customs, revised parts of the definitions relating to business and other expressions, omitted clause (18), corrected a cross-reference, included article 371J in the local-authority definition, and clarified the meaning of services.
2. In section 2 of the Central Goods and Services Tax Act, 2017 (hereinafter referred to as the principal Act),-
(a) in clause (4),-
(i) for the words "Central Board of Excise and Customs", the words "Central Board of Indirect Taxes and Customs" shall be substituted;
(ii) for the words "the Appellate Authority and the Appellate Tribunal", the words, brackets and figures "the Appellate Authority, the Appellate Tribunal and the Authority referred to in sub-section (2) of section 171" shall be substituted;
(b) in clause (17), for sub-clause (h), the following sub-clause shall be substituted, namely:-
"(h) activities of a race club including by way of totalisator or a license to book maker or activities of a licensed book maker in such club; and";
(c) clause (18) shall be omitted;
(d) in clause (35), for the word, brackets and letter "clause (c)", the word, brackets and letter "clause (b)" shall be substituted;
(e) in clause (69), in sub-clause (f), after the word and figures "article 371", the words, figures and letter "and article 371J" shall be inserted;
(f) in clause (102), the following Explanation shall be inserted, namely:-
"Explanation.-For the removal of doubts, it is hereby clarified that the expression "services" includes facilitating or arranging transactions in securities;".
Meaning of key terms
Business: Section 2(17) gives an inclusive meaning to business for GST purposes. The 2018 amendment specifically revised the treatment of race-club activities in that definition.
Services: Section 2(102) broadly covers anything other than goods, money and securities, subject to the statutory wording. The inserted Explanation clarified that facilitating or arranging transactions in securities is included within services.
Section 3 of the Amendment Act: Amendment of section 7 - Scope of supply
Section 7 of the CGST Act defines the scope of "supply", the central taxable event under GST. The 2018 amendment separated the question whether an activity is a supply from its classification as goods or services under Schedule II.
3. In section 7 of the principal Act, with effect from the 1st day of July, 2017,-
(a) in sub-section (1), -
(i) in clause (b), after the words "or furtherance of business;", the word "and" shall be inserted and shall always be deemed to have been inserted;
(ii) in clause (c), after the words "a consideration", the word "and" shall be omitted and shall always be deemed to have been omitted;
(iii) clause (d) shall be omitted and shall always be deemed to have been omitted;
(b) after sub-section (1), the following sub-section shall be inserted and shall always be deemed to have been inserted, namely:-
"(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.";
(c) in sub-section (3), for the words, brackets and figures "sub-sections (1) and (2)", the words, brackets, figures and letter "sub-sections (1), (1A) and (2)" shall be substituted.
Section 4 of the Amendment Act: Amendment of section 9 - Reverse charge
Section 9 is the charging provision for Central GST. Sub-section (4), as substituted by the 2018 Amendment Act, moved away from a general reverse-charge formulation for purchases from unregistered suppliers and empowered the Government, on the GST Council's recommendations, to notify specified classes of registered recipients and specified categories of supplies.
4. In section 9 of the principal Act, for sub-section (4), the following sub-section shall be substituted, namely:-
"(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.".
Reverse charge means that the recipient, rather than the supplier, is made liable to pay GST in the circumstances specified by law or notification. Liability under section 9(4) therefore depends on the statutory provision read with the notifications applicable to the relevant person, supply and period.
Section 5 of the Amendment Act: Amendment of section 10 - Composition levy
Section 10 provides a simplified composition levy for eligible registered persons, subject to statutory conditions. The 2018 amendment increased the turnover figure appearing in the proviso from Rs. 1 crore to Rs. 1.5 crore and allowed limited supply of services by persons opting under specified composition clauses.
5. In section 10 of the principal Act,-
(a) in sub-section (1) -
(i) for the words "in lieu of the tax payable by him, an amount calculated at such rate", the words, brackets and figures "in lieu of the tax payable by him under sub-section (1) of section 9, an amount of tax calculated at such rate" shall be substituted;
(ii) in the proviso, for the words "one crore rupees", the words "one crore and fifty lakh rupees" shall be substituted;
(iii) after the proviso, the following proviso shall be inserted, namely:-
"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.";
(b) in sub-section (2), for clause (a), the following clause shall be substituted, namely:-
"(a) save as provided in sub-section (1), he is not engaged in the supply of services;".
Official legal references
For authoritative and updated material, consult the current consolidated Central Goods and Services Tax Act, 2017 on India Code and the CBIC GST portal. The Gazette text and applicable notifications prevail for legal purposes.