GST #Issue14 – Power of Govt to retrospectively Change Exemption from GST

CA Satbir Singh — Tue, 10 Jan 2017 05:46:39 +0000

Power of Govt to retrospectively Change Exemption from GST

Facts as per Section 11(3) of Revised Model GST Law

Section 11 of Revised Model GST Law empowers Central/ State Governments to exempt …………………. Goods and/or services from whole or any part of the tax leviable thereon. But Section 11(3) provides as follow :-

11. Power to grant exemption from tax

(3) The Central or a State Government may, if it considers necessary or expedient so to do for the purpose of clarifying the scope or applicability of any notification issued under sub-section (1) or order issued under sub-section (2), insert an explanation in such notification or order, as the case may be, by notification at any time within one year of issue of the notification under sub-section (1) or order under sub-section (2), and every such explanation shall have effect as if it had always been the part of the first such notification or order, as the case may be.

Issue on Power to grant exemption from tax

This provision empowers the Central / State government to retrospectively change / amend / alter / modify the nature of exemption. This leads to a situation, where the benefit of exemptions intended to be granted to supplies under this section with the concurrence of the council could stand denied to supplies of such goods/services. In the possibility of retrospectivity as well as the vulnerability to introduce changes with the Council’s concurrence,
this sub section may be detrimental to the interest of the assessees.

Suggestion on Power to grant exemption from tax

It is suggested that a proviso be added to sub-section 3 to provide that “every such insertion / amendment / modification that has the effect of increasing the tax payable be effective from the date of such insertion”