The
Finance Minister, Arun Jaitley, on Friday, 31 March
2017 introduced the Taxation Laws (amendment) Bill 2017 in the Lok Sabha.
The Bill
seeks to amend the Customs Act 1962, the Customs Tariff Act 1975, the Central
Excise Act 1944, the Finance Act, 2001 and the Finance Act, 2005 and to repeal
certain enactments.
The
Customs Act is proposed to be amended to include "warehouse" in the
definition of "customs area" to ensure that an importer would not be
required to pay the proposed integrated goods and services tax at the time of
removal of goods from a customs station to a warehouse.
The
Customs Tariff Act, 1975 is proposed to be amended to provide for levy of
integrated goods and services tax and goods and services tax compensation cess on imported goods so as to provide a level playing
field to the domestic industry vis-a-vis imported goods.
This
Bill also seeks to abolish certain cesses or
surcharges which are levied or collected as duty of excise or service tax under
various Acts.
It
also seeks to abolish the cess levied on water
consumed by certain industries and local authorities under the Water
(Prevention and Control of Pollution) Cess Act 1977.
Statement of Objects and Reasons
As the goods and services tax is to
be introduced with effect from the 1st day of
July, 2017, the following four
legislations are in the process of being enacted, namely:—
(a) the Central Goods and Services Tax Bill,
2017;
(b) the Integrated Goods and Services Tax
Bill, 2017;
(c) the Union Territory Goods and Services Tax
Bill, 2017;
(d) the Goods and Services Tax (Compensation
to the States) Bill, 2017.
2. Consequently,
the central excise duty on excisable goods [other than Petroleum Crude, Motor
Spirit (Petrol), High Speed Diesel, Aviation Turbine Fuel and Natural Gas], the
service tax on taxable services, the value added tax on sale or purchase of
goods and certain other taxes shall be subsumed in the goods and services tax.
Therefore, it requires certain consequential amendments in the Customs Act,
1962, the Customs Tariff Act, 1975, the Central Excise Act, 1944, the Finance
Act, 2001 and the Finance Act, 2005 and repeal of certain enactments.
3. The
Customs Act, 1962 provides for removal of goods from a customs station to a
warehouse without payment of duty. It is proposed to amend the said Act to
include 'warehouse' in the definition of "customs area" to ensure
that an importer would not be required to pay the proposed integrated goods and
services tax at the time of removal of goods from a customs station to a
warehouse. It is also proposed to amend the said Act to insert new provisions
therein so as to provide for furnishing of information by specified persons in
respect of import or export of goods, on the lines of the Income-tax Act, 1961,
the Central Excise Act, 1944, Chapter V of the Finance Act, 1994 and the
legislations referred to in paragraph 1.
4. The
Customs Tariff Act, 1975 is proposed to be amended to provide for levy of
integrated goods and service tax and goods and services tax compensation cess on imported goods, including valuation thereof, so as
to provide a level playing field to the domestic industry vis-à-vis imported
goods.
5. Consequent
to the proposed repeal of the Central Excise Tariff Act, 1944 vide the
Central Goods and Services Tax Bill, 2017, a new Schedule, namely, the Fourth
Schedule is proposed to be inserted in the Central Excise Act, 1944 to provide
for classification and duty rates for
excisable goods, namely, Petroleum Crude, Motor Spirit (Petrol), High
Speed Diesel, Aviation Turbine Fuel and Natural Gas, Tobacco and Tobacco
products, which are presently covered under
Chapter 24 and Chapter 27 of the Central Excise Tariff Act, 1985, so
that the said Schedule will continue to attract central excise duty even after
the commencement of the legislations
referred to in paragraph 1. Certain consequential amendments are
proposed to be made in the Central
Excise Act, 1944 also relating to certain definitions, charging sections,
provisions of deemed manufacture and insertion of emergency powers to increase
the rate of duty, on the same lines as are presently provided in the Central
Excise Tariff Act, 1985.
6. Consequent
to the introduction of goods and services tax, the cesses
or surcharges levied or collected as
duties of central excise on excisable goods or as service tax on taxable
services would become irrelevant, as the supplies of such goods [except
Petroleum Crude, Motor Spirit (Petrol), High Speed Diesel, Aviation Turbine
Fuel and Natural Gas, Tobacco and Tobacco products] and such services would be
chargeable to goods and services tax.The proposed
Bill seeks to abolish certain cesses or surcharges
which are levied or collected as duty of excise or service tax under various
Acts. The proposed Bill also seeks to abolish the cess levied on water consumed
by certain industries and by local authorities under the Water (Prevention and
Control of Pollution) Cess Act, 1977.
7. The Bill seeks to achieve the above
objectives.
Notes on Clauses
Clause 2 of the Bill seeks to amend clause (11)
of section 2 of the Customs Act, 1962 so as to include 'warehouse' in the
definition of customs area to ensure that an importer is not asked to pay
Integrated Goods and Services Tax at the time of removal of goods from a
customs station to a warehouse.
Clause 3 of the Bill seeks to insert new
sections 108A and 108B in the Customs Act, 1962, so as to provide for
furnishing of such information in respect of import or export of goods, as may
be prescribed by rules, by persons specified therein.
Clause 4 of the Bill seeks to amend section
3 of the Customs Tariff Act, 1975 so as to levy Integrated Goods and Service
Tax and Goods and Services Tax Compensation Cess on
imported goods and/or services.
Clause 5 of the Bill seeks to amend section
2 of the Central Excise Act, 1944 so as to replace the reference to the First
Schedule and the Second Schedule to the Central Excise Tariff Act, 1985, with
the reference to the proposed Fourth Schedule to the Central Excise Act, 1944,
in the definition of "excisable goods" and "manufacture"
and also to delete the reference to "salt" in the definition of
"factory".
Clause 6 of the Bill seeks to amend section
3, the charging section, so as to replace the reference to the First Schedule
and the Second Schedule to the Central Excise Tariff Act, 1985, with the reference
to the proposed Fourth Schedule to the Central Excise Act, 1944, and to delete
the provision for levy of special duty of excise provided under clause (b)
of sub-section (1) of section 3.
Clause 7 of the Bill seeks to amend section
3A of the Central Excise Act, 1944, which provides for levy of central excise
duty on the basis of capacity of production in respect of notified goods, so as
to replace the reference to the First Schedule and the Second Schedule to the
Central Excise Tariff Act, 1985, with reference to the proposed Fourth Schedule
to the Central Excise Act, 1944.
Clause 8 of the Bill seeks to insert two new
sections 3B and 3C pertaining to emergency power of Central Government to
increase the rate of duty of Excise and power of Central Government to amend
the proposed Fourth Schedule to the Central Excise Act, 1944, respectively, on
the same line as they exist in the Central Excise Tariff Act, 1985.
Clause 9 of the Bill seeks to amend section
38 of the Central Excise Act, 1944 so as to enable the Central Government to
lay before Parliament, the notification issued by it to amend the Fourth
Schedule in exercise of the power conferred under the proposed section 3C.
Clause 10 of the Bill seeks to insert a new
section 38B for savings of references to Chapter, heading, sub-heading and
tariff item in Central Excise Tariff Act, 1985.
Clause 11 of the Bill seeks to substitute
the Third Schedule to the Central Excise Act, 1944 with a new Schedule by
omitting the entries relating to goods which would be chargeable to Goods and
Services Tax.
Clause 12 of the Bill seeks to insert a new
Fourth Schedule in the Central Excise Act, 1944 so as to prescribe the central
excise tariff in respect of goods which would continue to be chargeable to
central excise duty even after the introduction of Goods and Services Tax.
Clause 13 of the Bill seeks to amend the
Seventh Schedule to the Finance Act, 2001 to retain entries relating to Tobacco
and Tobacco products and petroleum oils and oils obtained from bituminous
minerals, crude.
Clause 14 of the Bill seeks to amend the
Seventh Schedule to the Finance Act, 2005, so as to omit the entries relating
to Pan Masala.
Clause 15 of the Bill seeks to repeal
certain enactments specified in the Third Schedule to the extent mentioned in
the fourth column thereof.
Clause 16 of the Bill seeks to provide for
collection and payment of arrears of duties notwithstanding the repeal of the
enactments specified in the Third Schedule.