Government issues Notifications pursuant to enactment of the Finance Bill, 2023

The Union Budget 2023 was presented by the Hon’ble Finance Minister Smt. Nirmala Sitharaman in the Parliament on 1 February 2023. The Finance Bill, 2023 was subsequently passed by both the houses of Parliament and it received the President’s assent on 31 March 2023[1]. Consequently, the Government has issued Notifications[2] to give effect to various amendments in the Finance Act.

This Tax Alert summarizes Indirect tax related changes notified pursuant to the enactment of the Finance Bill.

Highlights:

• As per section 25(4A) of the Customs Act, 1962 (Customs Act), all the conditional exemptions granted by way of notifications under Section 25(1) shall be valid up to 31 March falling immediately after two years from the date of issuance or variation of such notification. W.e.f. 1 April 2023, the above validity period of two years shall not apply in specified cases.
  
• Effective 1 April 2023, the Settlement Commission under the Customs Act is required to pass an order within a period of nine months from the last date of the month in which application is made. The same may be extended by a further period of three months.
• W.e.f. 31 March 2023, the First Schedule to the Customs Tariff Act, 1975 is amended to: (a) Increase tariff rates on certain tariff items (b) Modify the tariff rates on certain tariff items as part of rationalization of customs duty rate structure (c) Exclude solar power plant/ solar power project from the purview of Project Imports
• The Schedule to the Goods and Services Tax (Compensation to States) Act, 2017 is being amended w.e.f. 1 April 2023 to change the rate of Compensation Cess for “pan masala” and “tobacco and manufactured tobacco substitutes, including tobacco products”. Consequential amendments have been carried out in Notification No. 1/2017 - Compensation Cess (Rate) dated 28 June 2017.

Further, the time limit to issue order under Section 73(10) of the Central Goods and Services Tax Act, 2017 in respect of recovery of tax not paid or short paid or of input tax credit wrongly availed or utilized for any reasons other than fraud, has been extended[3] as follows:

• For financial year (FY) 2017-18 – up to 31 December 2023
• For FY 2018-19 – up to 31 March 2024
• For FY 2019-20 – up to 30 June 2024 

Notifications[4] have also been issued to give effect to various recommendations made by the GST Council in its 49th meeting.

[1] Gazette ID - CG-DL-E-31032023-244830 dated 31 March 2023
[2] Notification Nos. 21/2023-Customs (N.T.), 1/2023-Compensation Cess and 2/2023-Compensation Cess (Rate), all dated 31 March 2023
[3] Notification Nos. 9/2023-Cental Tax dated 31 March 2023
[4] Notification Nos. 1-8/2023-Cental Tax, all dated 31 March 2023