CBIC clarifies on effective date of explanation inserted in Notification regarding exclusion of activities or transactions undertaken by Government and Local Authority from the term ‘business’

Oct 16, 2019 | by Avantis RegTech Legal Research Team


The Central Board of Indirect Taxes and Customs (CBIC) on October 11, 2019, has clarified that September 21, 2017 is the effective date of explanation inserted in Notification No. 11/2017-CTR dated June 28, 2017, Sr. No. 3(vi) regarding exclusion of activities or transactions undertaken by Government and Local Authority from the term ‘business’.

However, as per GST Council the explanation was inserted in Sr. No. 3(vi) “For the purposes of this item, the term ‘business’ shall not include any activity or transaction undertaken by the Central Government, a State Government or any local authority in which they are engaged as public authorities”, vide Notification No. 17/2018-CTR dated July 26, 2018 within one year of the insertion of the original entry prescribing concessional rate, so that it would have effect from the date of inception of the entry i.e. September 21, 2017.

Therefore, CBIC clarified that the explanation having been inserted under section 11(3) of the CGST Act, which specifies that Government may 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 and every such explanation shall have effect as if it had always been the part of the first such notification or order, is effective from the inception of the entry at Sl. No. 3(vi) of the Notification No. 11/2017- CTR dated June 28, 2017, that is September 21, 2017. The line in notification No. 17/2018-CTR which states that the notification shall come into effect from July 27, 2017 does not alter the operation of the Notification in terms of Section 11(3).

[Circular No. 120/39/2019- GST]


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