THE TAXATION LAWS (AMENDMENT) ACT, 2017

An Act to amend the Customs Act, 1962, the Customs Tariff Act, 1975, the Central Excise Act, 1944, the Central Sales Tax Act, 1956, the Finance Act, 2001 and the Finance Act, 2005 and to repeal certain enactments. The primary aim of the act is to comply with GST laws on customs, excise and service tax. Excise, VAT and services will be included in the proposed indirect tax system. On March 31, 2017, in Lok Sabha, the Taxation Laws (Amendment) Bill, 2017 was presented.  

Customs Act, 1962 and Customs Tariff Act 1975

In the customs act after section 108, the following sections shall be inserted 

108A (1) Specifies 17 categories of people like income tax authority, a bank officer, Postmaster General, etc. to mandatorily provide information to the customs officer in a prescribed format 

108A (2) Where such information has been furnished as the proper officer considers defective shall be rectified within seven days. If such information is not rectified within seven days, then it shall be considered as not furnished, and the provisions of this act shall apply.  

108 B is for Penalty for Failure to Furnish Information, If the person so required to furnish information fails to do so then within a specified amount of time. The officer may impose a fine after 30 days serving the notice. Fine would amount to 100/day until the information is provided.

In the Customs Tariff Act, in section 3 for sub-sections 7 and 8 followings will be substituted 

3(7) and 3(8) Levy of Integrated goods and services tax (IGST) on imported goods on the aggregate value of the imported goods, Customs duty, levied under the act and any other amount charged under any other law. 

3(9) and 3(10) Levy of GST Compensation Cess on imports, i.e. Goods imported, will be liable to the GST Compensation Cess.  The Cess will be levied on the aggregate of the value of the imported goods, and Customs Duty levied under the act, and any other amount chargeable under any law.

Central Excise Act, 1944 

In central Excise act in section 3A the following subsection shall be inserted 

3B and 3C in which Central Excise Duty is levied on various excisable goods such as tobacco, petroleum products, rubber, oils, vehicles, etc.  This is proposed to be changed to levy duty only on certain kind of

 (i) petroleum products such as motor spirit, high-speed diesel, aviation turbine fuel, and 

(ii) tobacco products.  These goods on which the excise duty was levied were mentioned in the Central Excise Tariff Act, 1985.  These will be moved to the Fourth Schedule of the 1944 Act.  Note that the 1985 Act is proposed to be repealed under the Central Goods and Services Tax Bill, 2017.

Under the fourth schedule of the act, the central government has powers to change excise rates through a notification in emergency circumstances. Further, it also inserts a provision to allow the central government to amend the newly inserted Fourth Schedule through notification.

In Finance act, 2001 Amendment to the seventh schedule, The Finance Act, 2001 levies the National Calamity Contingent Duty on a variety of goods such as pan masala, tobacco products, telephones, motor vehicles, crude oil, petroleum products, among others.

In Finance act, 2005 amendment of the seventh schedule to act 18 of 2015 The Finance Act, 2005 levies an Additional Excise Duty on several items such as pan masala and tobacco products.

The Taxation Amendment Act 2017 has made amendments to duty on import of goods as have been proposed to be levied under the Customs Act. Enabling provisions were then implemented to levy the cessation of IGST and GST payments on imports of goods into India. Amendments to restrict it to products like tobacco products, cigarettes, petroleum products, etc. that are not subsumed in GST or subsumed at a later date have been proposed in the Excise legislation.  The Bill seeks to repeal four laws which include the Sugar Cess Act, 1982 and the Jute Manufactures Cess Act, 1983.  It also repeals certain provisions of 10 laws which include the Rubber Act, 1947, the Industries (Development and Regulation) Act, 1951, and the Coal Mines (Conservation and Development) Act, 1953.  Any uncollected duties (arrears) under the above Acts shall be collected by the respective collecting agencies and remitted to the Consolidated Fund of India. It also amends financial act, 2001 to limit the levy only to tobacco products and crude oil and Financial Act, 2005 to remove petroleum oils, crude and other related products from the list. 

The purpose of the Taxation Laws (Amendment) Bill, 2017 is to get the Indian GST closer to what it is proposed to be, i.e. to subsume many of the cessions and indirect central and state taxes. However, the duty of excise and CST on a very few goods as specified; tobacco and petroleum products, would continue. The said Bill also clarifies the manner of levy of IGST on imported goods. Education cess and secondary and higher education cess on customs duty are likely to continue. Overall, it is one more important step by the government to ensure a smooth transformation of current indirect taxes into GST.