Section 174 of GST – Repeal and Saving

Section 174 of GST – Repeal and saving. Complete Details for GST Section 174 under GST Act 2017. In this GST Section you may find all details for Repeal and saving GST Act 2017Detailed Analysis of GST Section 174 of GST Act 2017. We Provide Complete Details for All GST Section’s and In this article you may find all details for GST Section 174Check Section Wise Analysis of GST Act 2017, Chapter Wise Analysis of GST All Sections. in this article you may find complete details regarding Section 174 of GST Act 2017 – Repeal and saving, gst all sections and definitionsNow Check more details from below…..

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Section 174 of GST – Repeal and saving

Statutory provision

(1) Save as otherwise provided in this Act, on and from the date of commencement of this Act, the Central Excise Act, 1944 (except as respects goods included in entry 84 of the Union List of the Seventh Schedule to the Constitution), the Medicinal and Toilet Preparations (Excise Duties) Act, 1955, the Additional Duties of Excise (Goods of Special Importance) Act, 1957, the Additional Duties of Excise (Textiles and Textile Articles) Act, 1978, and the Central Excise Tariff Act, 1985 (hereafter referred to as the repealed Acts) are hereby repealed.
(2) The repeal of the said Acts and the amendment of the Finance Act, 1994 (hereafter referred to as “such amendment” or “amended Act”,) to the extent mentioned in the sub-section (1) or section 173 shall not—

  • (a) revive anything not in force or existing at the time of such amendment or repeal; or
  • (b) affect the previous operation of the amended Act or repealed Acts and orders or anything duly done or suffered thereunder; or
  • (c) affect any right, privilege, obligation, or liability acquired, accrued or incurred under the amended Act or repealed Acts or orders under such repealed or amended Acts

Provided that any tax exemption granted as an incentive against investment through a notification shall not continue as privilege if the said notification is rescinded on or after the appointed day; or

  • (d) affect any duty, tax, surcharge, fine, penalty, interest as are due or may become due or any forfeiture or punishment incurred or inflicted in respect of any offence or violation committed against the provisions of the amended Act or repealed Acts; or
  • (e) affect any investigation, inquiry, verification (including scrutiny and audit), assessment proceedings, adjudication and any other legal proceedings or recovery of arrears or remedy in respect of any such duty, tax, surcharge, penalty, fine, interest, right, privilege, obligation, liability, forfeiture or punishment, as aforesaid, and any such investigation, inquiry, verification (including scrutiny and audit), assessment proceedings, adjudication and other legal proceedings or recovery of arrears or remedy may be instituted, continued or enforced, and any such tax, surcharge, penalty, fine, interest, forfeiture or punishment may be levied or imposed as if these Acts had not been so amended or repealed;
  • (f) affect any proceedings including that relating to an appeal, review or reference, instituted before on, or after the appointed day under the said amended Act or repealed Acts and such proceedings shall be continued under the said amended Act or repealed Acts as if this Act had not come into force and the said Acts had not been amended or repealed.

(3) The mention of the matters referred to in sub-sections (1) and (2) shall not be held to prejudice or affect the general application of section 6 of the General Clauses Act, 1897 with regard to the effect of repeal.

Analysis and Updates

Introduction

These provisions indicate the extent of erstwhile indirect tax laws, which would continue upon introduction of CGST Act. It also provides for exceptions as to continuation of certain provisions of the erstwhile laws for the sake of smooth transition. Further certain Acts would be repealed upon introduction of CGST Act.

Analysis

  • (a) These provisions have to be read along with the Transition provisions in chapter XX.
  • (b) It came into force on the date of enactment of the CGST Act i.e.01-07-2017.
  • (c) Whenever an enactment is repealed or substituted by a new enactment then the new enactment should provide for a clause relating to repeal or saving of certain provisions under the old law.
  • (d) This would ensure that the rights, powers, liabilities, duties, privileges, obligations etc. created under the old laws are intact and are not affected by the enactment of new law by repealing the old laws.
  • (e) Entry 84 of the Union List and Entry 54 of the State List, both forming part of the VII Schedule to the Constitution as amended by the Constitutional (101st Amendment) Act 2016 would continue to apply to certain goods.
  • (f) For the said purpose, the General Sales Tax/VAT / CST laws and Central Excise Act, 1944 and Central Excise Tariff Act, 1985 would continue to apply – E.g. Certain petroleum products, tobacco products.
  • (g) Thus, these laws would operate even after the GST is introduced to the extent they continue to operate in respect of goods that still remain under the earlier laws, as amended by the Taxation Laws Amendment Act, 2017.
  • (h) Subject to the above comments the following laws would be repealed, as the taxes are subsumed by GST law:

State laws (refer section 173 of State GST Act):

    • (i) Entry Tax laws;
    • (ii) Entertainment Tax laws;
    • (iii) Luxury Tax laws;
    • (iv) Value added Tax laws;
    • (v) laws on Advertisement;
    • (vi) laws on lottery, Betting and Gambling;
    • (vii) CST Act.

Central laws:

    • (i) Duty of Excise on Medicinal and Toilet Preparation Act;
    • (ii) Chapter V of the Finance Act, 1994 (Service Tax law);
    • (iii) Central Excise Act,1944;(except in respect of goods included in entry 84 of the seventh schedule to the constitution)
    • (iv) Additional duties of Excise (Goods of Special Importance Act, 1957);
    • (v) Additional duties of Excise (Textile and textile products Act,1978);
    • (vi) Additional Custom Duty (CVD);
    • (vii) Special Additional Duty of Customs(SAD).
    • (viii) Medical & toilet preparations (excise duties) Act,1955
    • (ix) Central excise tariff Act,1985
  • (i) Please note that ‘repeal’ is not the same as ‘omission’. Section 6 of General Clauses Act, 1897 which is the substantive law on interpretation in such cases. Please note as per article 367, even Constitutional Amendment Acts are to be interpreted as per General Clauses Act. Now, this section 6, ‘saves’ all rights, privileges as well as liabilities, punishments and ongoing investigations. There has been much debate whether earlier laws have been suddenly obliterated from the statue book or do they survive. High Courts has issued interim injunction in respect of new audits proposes to be undertaken in respect service tax after the introduction of GST. The jurisprudence applicable here is that ‘new investigations’ cannot be initiated after repeal of the earlier law. But, investigations already initiated are however, saved by the repeal. Consider an example, that goods in respect of which Cenvat Credit was availed (and utilized or transitioned any untilized balance) is destroyed by fire after July 2017. In this case, although Cenvat Credit Rules stand repealed, the conditions attached to claim of Cenvat Credit must be satisfied until said goods are used as if there was no such repeal. To the extent credit that was availed which is now defeated (due to fire), that credit is liable to be demanded under the earlier laws and not under section 17(5)(h). Reversing GST (CGST and SGST portions) is not appropriate as credit availed is Cenvat and not GST. And section 17(5)(h) cannot be applicable in respect of any tax other than GST. Reference may be had to section 142(2) which lends the machinery provisions of GST law to be used to recover taxes payable under earlier laws. Hence, it is important to carefully understand the meaning and effect of ‘saving’ of earlier laws by operation of section 6 of General Clauses Act which can be pressed into service even though there is no express clause in GST law similar to article 367. The expression ‘repeal’ takes within itself ‘saving’ but not if the expression is ‘omitted’ against any provision or law.
  • (j) Similarly, proceedings already initiated under State laws can be continued to the extent ‘saved’ by the repeal of earlier State laws. It is this authority that permits States from conducting re-assessments which is not a new proceeding but continuation of the assessment already concluded. All assessments are continuation of earlier proceedings. But, prosecution proceedings, proposed but kept in abeyance until final disposal, arising from assessment or re-assessment will be new proceedings and not continuation of earlier proceedings. Care must be taken to identify ‘old’ or ‘new’ proceedings under earlier laws that may be initiated in the GST regime. Please also note, where new proceedings are not challenged but acquiesced by the assessee, Courts have not been liberal but allowed revenue to take advantage where assessee (due to lack of understanding of this concept) failed to challenge validity of new proceedings right at the time of its institution but submitted objections of merits. However, experts believe that acquiescence by assessee cannot legitimize new proceedings initiated subsequently which are not saved by repeal of earlier laws.
  • (k) Now, while rights, privileges as well as liabilities, punishments and ongoing investigations, that is not to say that there is unfetter authority for revenue to continue administering earlier laws ‘as if’ there was no repeal at all. The repeal is with restricted application that the earlier laws would not:
    1. Revive anything not in force or existing at the time at which the amendment or repeal takes effect. To illustrate, if a person has not taken credit in the earlier regime due to restrictions on time limit, he does not get a chance to claim it after such time limit is removed due to repeal of ST law.
    2. Affect the previous operation of the amended/repealed Acts or anything duly done or suffered there under. To illustrate, if a person has duly filed returns under the old regime proceedings to deny ineligible credits or unpaid output taxes can be initiated now but within the period of limitation as applicable under the earlier laws.
    3. Affect any right, privilege, obligation, or liability acquired, accrued or incurred under the amended/repealed Acts. To illustrate, a right of appeal, which accrues under the old regime and duly exercised before the CESTAT or Commissioner (Appeals) does not fail due to restricted application of the old laws. Similarly, the mandatory pre-deposit made under section 35F of the Central Excise Act, 1944, to pursue an appeal cannot be claimed as refund after GST is introduced.
    4. Affect any tax, surcharge, penalty, interest as are due or may become due or any forfeiture or punishment incurred or inflicted in respect of any offence or violation committed under the provisions of the amended/repealed Acts. For example, if a Central Excise case is decided by the Supreme Court after enactment of GST and the party’s appeal is rejected then the liabilities can still be enforced even though the CE Act may be repealed or applied in a restricted manner.
    5. Affect any investigation, enquiry, assessment proceeding, any other legal proceeding or remedy in respect of any such tax, surcharge, penalty, interest, right, privilege, obligation, liability, forfeiture or punishment, as aforesaid, and any such investigation, enquiry, assessment proceeding, adjudication and other legal proceeding or remedy may be instituted, continued or enforced, and any such tax, surcharge, penalty, interest, forfeiture or punishment may be levied or imposed as if these Acts had not been so restricted or not so enacted. To illustrate, if on the date of enactment of GST law, the matter is under investigation, it can be continued and the SCN can be issued subsequently invoking the earlier provisions.
    6. Affect any proceeding including that relating to an appeal, revision, review or reference, instituted before the appointed day under the earlier law and such proceeding shall be continued under the earlier law as if this Act had not come into force and the said law had not been repealed. To illustrate, all the pending matters before the Commissioner (Appeals), Revisionary Authority, CESTAT, High Court and Supreme Court, would be continued and would not abate due to introduction of GST law.

Section 6 in The General Clauses Act, 1897

Effect of repeal. Where this Act, or any Central Act or Regulation made after the commencement of this Act, repeals any enactment hitherto made or hereafter to be made, then, unless a different intention appears, the repeal shall not—

(a) revive anything not in force or existing at the time at which the repeal takes effect; or

(b) affect the previous operation of any enactment so repealed or anything duly done or suffered thereunder; or

(c) affect any right, privilege, obligation or liability acquired, accrued or incurred under any enactment so repealed; or

(d) affect any penalty, forfeiture or punishment incurred in respect of any offence committed against any enactment so repealed; or

(e) affect any investigation, legal proceeding or remedy in respect of any such right, privilege, obligation, liability, penalty, forfeiture or punishment as aforesaid, and any such investigation, legal proceeding or remedy may be instituted, continued or enforced, and any such penalty, forfeiture or punishment may be imposed as if the repealing Act or Regulation had not been passed.

Issues and Controversies

Can ST audit be taken up now. does it amount to new proceedings being initiated or continuation of saved actions? As ST audit is a ‘new investigation’, High Courts have expressed reservation that something that is ‘not saved’ by section 6 of General Clauses Act can derive authority if ST audits were permitted. Care must be taken to differentiate between continuation of proceedings versus commencement of new proceedings.

Comparative review

It would be interesting to refer to the Supreme Court decision in Kolhapur Cane sugar Works Limited Vs UOI, 2000 (119) ELT 257 (SC), which has explained the effect and importance of repeal or saving clause by referring to section 6 of the General Clauses Act, 1887. Since there is a special provision in the GST Act, it would apply. Wherever the specific provision does not address a particular issue relating to repeal or saving, it is necessary to fall back on the provisions of General Clauses Act.

FAQs

Q1. Which are the State laws repealed after introduction of GST?

Ans. Entry Tax laws, Entertainment Tax laws and Luxury Tax laws, Value added Tax, laws on Advertisement, laws on lottery, Betting and Gambling, CST Act.

Q2. Which are the Central laws repealed after introduction of GST?

Ans. (i) Duty of Excise on Medicinal and Toilet Preparation Act.
(ii) Chapter V of the Finance Act, 1994 (Service Tax law).
(iii) Central Excise Act;
(iv) Additional duties of Excise (Goods of Special Importance);
(v) Additional duties of Excise (Textile and textile products);
(vi) Additional Custom Duty (CVD);
(vii) Special Additional Duty of Customs(SAD)
(viii) Medical & toilet preparations (excise duties) Act,1955Central excise tariff Act,1985

Q3. Which are the State laws applied in a restricted manner after introduction of GST?

Ans. General Sales Tax/VAT would continue to apply on certain goods – E.g. certain petroleum products.

Q4. Which are the Central laws not repealed after enactment of GST?

Ans. CST Act, 1956, CE Act, 1944 and CE Tariff Act, 1985, would continue to apply – E.g. Certain petroleum products.

Q5. Central Excise law would apply to which goods after introduction of GST?

Ans. Certain petroleum products and tobacco products.

MCQs

Q1. The ___________ law which is not repealed after enactment of GST.
(a) Entry Tax law
(b) VAT law
(c) Company law
(d) Central Excise law.

Ans. (a) Company Law.

Q2. Central Excise law would continue to apply in respect of goods covered by Entry _____ of Union List of VII Schedule to the Constitution.
(a) 84
(b) 85
(c) 54
(d) 47

Ans. (a) 84

Q3. State sales tax and VAT laws would continue to apply in respect of goods covered by Entry _____ of State List of VII Schedule to the Constitution.
(a) 84
(b) 85
(c) 54
(d) 47

Ans. (c) 54.

Q4. After enactment of GST law, all departmental appeals filed in respect of Central Excise and Service Tax would _____________
(a) continue
(b) abate
(c) fail
(d) none of the above.

Ans. (a) continue

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