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Settling matters related with seizure of goods and conveyance may prove troublesome once amendment in GST Law through Finance Bill, 2021 gets enacted.
The Finance Bill has proposed amendment in Sections 74, 107(6), 129 and 130 of CGST law, which are related to the transport and storage of goods during transit. The Lok Sabha is scheduled to consider and pass the Finance Bill 2021 during the second half of the Budget session starting March 8.
The change in the law that has been proposed is — goods can be releasedon payment of penalty equal to 200 per cent of tax payable on such goods or 50 per cent of the value of goods (100 per cent of value of goods on account of both CGST & SGST), whichever is higher.
Expert view
According to Aditya Singhania, Partner with Singhania’s GST Consultancy & Co, undoubtedly, the cash outflow will remain the same as the current provision of law is merely divided under the heads of tax and penalty. The dispute over adjustment of such ‘tax’ paid seems to come to rest with this proposal as it is now proposed to classify entire 200 per cent of tax payable as ‘penalty’ which will have a bearing on income tax payable and also shall be disallowed completely for income tax purpose, he clarified.
A GST assessee can appeal against detention by paying a pre-deposit of 10 per cent of tax. However, the Finance Bill, 2021 proposes that appeal can be filed under Section 129(3) only when a sum equal to 25 per cent of penalty has been paid by the appellant.
Singhania said ‘tax and penalty’ has been proposed to be replaced by “penalty”, it is certain that the pre-deposit required for filing an appeal against such cases has been increased significantly , that is, base amount of penalty as well as the percentage (from 10 per cent of tax subject to maximum of ₹25 crore to 25 per cent of penalty) of pre-deposit have been increased.
“Filing of an appeal is a statutory right and the provisions of appeal should be such that the privilege to file an appeal should not be a deterrent to the factor of cash outflow. Further, pre-deposit should ideally be a certain percentage of tax and not penalty, therefore, if calculated in terms of tax, it would amount to 50 per cent of tax which is equal to 25 per cent of penalty in this case,” he said.
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