CGST Amendment Act 2018- Series 2

Following are the Key amendments in Section 7 , Schedule I and Schedule III, of the CGST Act 2017, amended vide CGST Amendment Act 2018 for which assent was given by President of India on 30th August 2018, but the provisions are expected to be notified on 1st February 2019.

A. Amendment in Supply [ Section 7)  (d)]  (retrospective Amendment from 1st July 2017.)

(i) Clause (d) Omitted

(d) the activities to be treated as supply of goods or supply of services as referred to in Schedule II.

(ii) Insertion of Subsection (1A)

“(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.”;

These amendments make it clear that the entries in Schedule II to the CGST Act are primarily for the purpose of classification and would not constitute supply by itself. That is, to come into the scope of  supply U/s 7 ,  entries contained in Schedule II has to clear the test of “supply made for a consideration in the course or furtherance of business 

B. Amendments in Schedule I (Activities to be treated as supply even if made without consideration)

Substitution in Para 4

Import of services by a person from a related person or from any of his other establishments outside India, in the course or furtherance of business.

Before amendment, this para was applicable only to  import of services by Taxable person. Now with this amendment  this para is applicable to import of service by even a non taxable person from  a related person any of his other establishments outside India, in the course or furtherance of business,

C. Amendments in Schedule III (Activities or transactions which shall be treated neither as a supply of goods nor a supply of services)

Insertion of following Paras

7. 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.

( Eg: Seller in India sourcing goods from China and supplying it to a  buyer in Dubai without the goods entering into India. This supply will be a Non GST supply to the seller in India. )

8. (a) Supply of warehoused goods to any person before clearance for home consumption;

(Eg: Importer in India (Mr X)  supplies the imported goods to a  person  (Mr Y) in India before customs clearance. These goods have entered India  but are warehoused as per the provisions of Customs Act, 1962 before payment of Customs duty.  Later Mr Y will clear the goods after paying appropriate Customs duty and IGST. The supply of these goods by Mr X to Mr Y will be a Non GST supply in the hands of  Mr X.)

(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.”;

(Eg: High Sea Sales)