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The Government clarifies that the explanation inserted via notification No. 17/2018-CTR is effective from 21 September 2017 based on section 11(3) of the CGST Act. The explanation excludes activities or transactions undertaken by the Government and Local Authority from the term business for Sr. No. 3(vi) of notification No. 11/2017-CTR. The statement in notification No. 17/2018-CTR that the notification takes effect on 27 July 2018 does not alter this statutory operation.
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Circular No. 120/39/2019- GST
F. No. 354/136/2019-TRU Government of India Ministry of Finance Department of Revenue (Tax research Unit) *****
Room No. 146G, North Block, New Delhi, the 11^th^ October 2019
To,
The Principal Chief Commissioners/ Chief Commissioners/ Principal Commissioners/ Commissioner of Central Tax (All) / The Principal Director Generals/ Director Generals (All)
Madam/Sir,
Subject: Clarification on the effective date of explanation inserted in notification No. 11/2017- CTR dated 28.06.2017, Sr. No. 3(vi) – reg.
Representations have been received to amend the effective date of notification No. 17/2018-CTR dated 26.07.2018 whereby explanation was inserted in notification No. 11/2017-CTR dated 28.06.2017, Sr. No. 3(vi) to the effect that for the purpose of the said entry, the activities or transactions under taken by Government and Local Authority are excluded from the term 'business'.
The matter has been examined. Section 11(3) of CGST Act provides that the Government may insert an explanation in any notification issued under section 11, for the purpose of clarifying its scope or applicability, 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.
As recommended by GST Council, the explanation in question was inserted vide notification No. 17/2018-CTR dated 26.07.2018 in exercise of powers under section 11(3) 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. 21.09.2017. However, like other notifications issued on 26.07.2018 to give effect to other recommendations of the GST Council, the said notification also contained a line in the last paragraph that the notification shall come into effect from 27.07.2018.
It is hereby clarified that the explanation having been inserted under section 11(3) of the CGST Act, is effective from the inception of the entry at Sl. No. 3(vi) of the notification No. 11/2017- CTR dated 28.06.2017, that is 21.09. 2017. The line in notification No. 17/2018-CTR
dated 26.07.2018 which states that the notification shall come into effect from 27.07.2017 does not alter the operation of the notification in terms of Section 11(3) as explained in para 3 above.
Yours Faithfully,
Shashikant Mehta OSD (TRU) E-mail: shashikant.mehta@gov.in Tel: 011-23095547
