KARNATAKA ACT NO.

39 OF 2021

THE KARNATAKA GOODS AND SERVICES TAX (AMENDMENT) ACT, 2021

1. Short title and commencement.-

2. Amendment of section 7.-
3. Amendment of section 16.-
4. Amendment of section 35.-
5. Substitution of new section for section 44.-
6. Amendment of section 50.-
7. Amendment of section 74.-
8. Amendment of section 75.-
9. Amendment of section 83.-
10. Amendment of section 107.-
11. Amendment of section 129.-
12. Amendment of section 130.-
13. Substitution of new section for section 151.-
14. Amendment of section 152.-
15. Amendment to Schedule II.-

STATEMENT OF OBJECTS AND REASONS

ACT 39 OF 2021.- The Karnataka Goods and Services Tax Act, 2O17 was
enabled with a view to make a provision for levy and collection of tax on intra-State
supply of goods or services or both by the Government of Karnataka.
It is considered necessary to amend the Karnataka Goods and Services Tax
Act, 2O17 (Karnataka Act No 27 of 2017) to,-
(1) insert clause (aa), in section 7, in sub-section (1), after clause (a) of the
Karnataka Goods and Services Tax Act (hereinafter referred to as principal Act), so
as the activities or transactions, by a person other than an individual, to its
members or constituents or vice-versa, shall be deemed to be two separate persons
and the supply of activities or transactions inter se shall be deemed to take place
from one such person to another. This amendment shall take effect retrospectively
from the 1st day of July, 2017;
(2) insert clause (aa), in section 16, in sub-section (2), after clause ( a) so as
in the statement of outward supplies has been furnished by the supplier and such
details have been communicated to the recipient of such invoice or debit note in the
manner specified under section 37;
(3) omit sub-section (5), in section 35;
(4) substitute the section 44 so as to ease the furnishing of an annual return
which may include a self-certified reconciliation statement, reconciling the value
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of supplies declared in the return furnished for the financial year, with the audited
annual financial statement for every financial year electronically.

(5) substitute the proviso to sub-section (1) of section 50 so as the interest on

tax payable in respect of supplies made during a tax period declared in the return
for the said period furnished after the due date in accordance with the provisions of
Section 39, except where such return is furnished after commencement of any
proceedings under section 73 or section 74 in respect of the said period shall be
payable on that portion of the tax which is paid by debiting the electronic cash
ledger. This amendment shall take effect retrospectively from the 1st day of July,
2017;
(6) substitute in section 74, the words and figures “sections 122, 125, 129
and 130” by the words and figures “sections 122 and 125”;
(7) insert Explanation in section 75, in sub-section (12) so that the expression
“self-assessed tax” shall include the tax payable in respect of details of outward
supplies furnished under section 37, but not included in the return furnished
under section 39;
(8) substitute sub-section (1) in section 83, so as for the purpose of protecting
the interest of the Government revenue the Commissioner may, by order in writing,
attach provisionally, any property, including bank account, belonging to the taxable
person or any person specified in sub-section (1A) of section 122, in such manner
be prescribed;
(9) insert proviso in section 107, in sub-section (6), so that no appeal shall be
filed against an order under sub-section (3) of section 129, unless a sum equal to
twenty-five per cent of the penalty has been paid by the appellant;
(10) (i) substitute clause (a) and clause (b), in section 129, so as to impose
penalty for goods and exempted goods if the owner of the goods
comes forward for payment or does not come forward for payment of
penalty;
(ii) omit sub-section (2) in section 129;
(iii) substitute sub-section (3) in section 129, so as to impose penalty
on detaining of goods and procedure;
(iv) so as to substitute in sub-section (4) of section 129, the words “No
tax , interest or penalty”, by the words “ No penalty”;
(v) substitute sub-section (6) in section 129, so as to impose penalty on
detained or seized goods procedure;
(11) (i) in sub-section(1) in section 130, so as to substitute for the words
“Notwithstanding anything contained in this Act if”, by the word
“Where”;
(ii) in sub-section(2) in section 130, so asto substitute for the words in
the second proviso, for the words , brackets and figures “amount of
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penalty leviable for under sub-section (1) of section 129”, by the

words “penalty equal to hundred per cent. of the tax payable of
such goods;
(iii) so as to omit sub-section(3) in section 130;
(12) substitute in section 151 of the principal Act so as the Commissioner or
an officer authorized by him to furnish information relating to any matter dealt with
in connection with this Act, within such time, in such form, and in such manner,
as may be specified therein;
(13) (i) in sub-section (1) in section 152 of the principal Act , to omit the
words “of any individual return or part thereof” and after the words
“any proceedings under this Act” to insert “without giving
opportunity of being heard to the person concerned”;
(ii) omit sub-section (2) in section 152;
(14) omit paragraph 7 in schedule II, this amendment shall be deemed to
have been omitted with effect from the 1st day of July, 2017.

Hence, the Bill.

[L.A. Bill No. 36 of 2021, File No. Samvyashae 39 Shasana 2021]

[Article 246 A of the Constitution of India.]

[Published in Karnataka Gazette Extra-ordinary No. 831 in part-IVA dated: 11.10.2021]

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KARNATAKA ACT NO.39 OF 2021

(First Published in the Karnataka Gazette Extra-ordinary on the 11th day of October
2021)

THE KARNATAKA GOODS AND SERVICES TAX (AMENDMENT) ACT, 2021

(Received the assent of the Governor on the 11th day of October, 2021)

An Act further to amend the Karnataka Goods and Services Tax Act, 2017
(Karnataka Act 27 of 2017).

Whereas, it is expedient further to amend the Karnataka Goods and

Services Tax Act, 2017 (Karnataka Act 27 of 2017), for the purpose hereinafter
appearing;

Be it enacted by Karnataka State Legislature in the Seventy second year

of the Republic of India, as follows:-

1. Short title and commencement.- (1) This Act may be called the
Karnataka Goods and Services Tax (Amendment) Act, 2021.

(2) Save as otherwise provided, the provisions of this Act shall come into force
on such date as the State Government may, by notification in the Official Gazette,
appoint:

Provided that, different dates may be appointed for different provisions of this
Act and any reference in any such provision to the commencement of this Act shall
be construed as a reference to the coming into force of that provision.

2. Amendment of section 7.- In the Karnataka Goods and Services Tax Act,
2017 (hereinafter referred to as the principal Act), in section 7, in sub-section (1),
after clause (a), the following clause shall be inserted and shall be deemed to have
been inserted with effect from the 1st day of July, 2017, namely:-

“(aa) the activities or transactions, by a person, other than an individual,

to its members or constituents or vice-versa, for cash, deferred payment
or other valuable consideration.

Explanation.- For the purposes of this clause, it is hereby clarified that,

notwithstanding anything contained in any other law for the time being in force or
any judgement, decree or order of any Court, tribunal or authority, the person and
its members or constituents shall be deemed to be two separate persons and the
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supply of activities or transactions inter se shall be deemed to take place from one
such person to another;”.

3. Amendment of section 16.- In section 16 of the principal Act, in sub-

section (2), after clause (a), the following clause shall be inserted, namely:-

“(aa) the details of the invoice or debit note referred to in clause (a) has
been furnished by the supplier in the statement of outward supplies and
such details have been communicated to the recipient of such invoice or
debit note in the manner specified under section 37;”.

4. Amendment of section 35.- In section 35 of the principal Act, sub-section

(5) shall be omitted.

5. Substitution of new section for section 44.- For section 44 of the

principal Act, the following section shall be substituted, namely:-

“44. Annual return.- Every registered person, other than an Input

Service Distributor, a person paying tax under section 51 or section 52, a
casual taxable person and a non-resident taxable person shall furnish
an annual return which may include a self-certified reconciliation
statement, reconciling the value of supplies declared in the return
furnished for the financial year, with the audited annual financial
statement for every financial year electronically, within such time and in
such form and in such manner as may be prescribed:

Provided that the Commissioner may, on the recommendations of the Council,

by notification, exempt any class of registered persons from filing annual return
under this section:

Provided further that nothing contained in this section shall apply to any
department of the Central Government or a State Government or a local authority,
whose books of account are subject to audit by the Comptroller and Auditor-
General of India or an auditor appointed for auditing the accounts of local
authorities under any law for the time being in force.”.

6. Amendment of section 50.- In section 50 of the principal Act, in sub-

section (1), for the proviso, the following proviso shall be substituted and shall be
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deemed to have been substituted with effect from the 1st day of July, 2017,
namely:-

“Provided that the interest on tax payable in respect of supplies made during a
tax period and declared in the return for the said period furnished after the due
date in accordance with the provisions of section 39, except where such return is
furnished after commencement of any proceedings under section 73 or section 74
in respect of the said period, shall be payable on that portion of the tax which is
paid by debiting the electronic cash ledger.”.

7. Amendment of section 74.- In section 74 of the principal Act, in

Explanation 1, in clause (ii), for the words and figures “sections 122, 125, 129 and
130”, the words and figures “sections 122 and 125” shall be substituted.

8. Amendment of section 75.- In section 75 of the principal Act, in sub-

section (12), the following Explanation shall be inserted, namely:-

‘Explanation.- For the purposes of this sub-section, the expression “self-

assessed tax” shall include the tax payable in respect of details of outward supplies
furnished under section 37, but not included in the return furnished under section
39.’.

9. Amendment of section 83.- In section 83 of the principal Act, for sub-

section (1), the following sub-section shall be substituted, namely:-

“(1) Where, after the initiation of any proceeding under Chapter XII,
Chapter XIV or Chapter XV, the Commissioner is of the opinion that for
the purpose of protecting the interest of the Government revenue it is
necessary so to do, he may, by order in writing, attach provisionally, any
property, including bank account, belonging to the taxable person or any
person specified in sub-section (1A) of section 122, in such manner as
may be prescribed.”.

10. Amendment of section 107.- In section 107 of the principal Act, in sub-
section (6), the following proviso shall be inserted, namely:-

“Provided that no appeal shall be filed against an order under sub-section (3) of
section 129, unless a sum equal to twenty-five per cent. of the penalty has been
paid by the appellant.”.
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11. Amendment of section 129.- In section 129 of the principal Act,-

(i) in sub-section (1), for clauses (a) and (b), the following clauses shall be
substituted, namely:-

“(a) on payment of penalty equal to two hundred per cent. of the tax payable
on such goods and, in case of exempted goods, on payment of an amount
equal to two per cent. of the value of goods or twenty-five thousand rupees,
whichever is less, where the owner of the goods comes forward for payment
of such penalty;

(b) on payment of penalty equal to fifty per cent. of the value of the goods or
two hundred per cent. of the tax payable on such goods, whichever is higher,
and in case of exempted goods, on payment of an amount equal to five per
cent. of the value of goods or twenty-five thousand rupees, whichever is less,
where the owner of the goods does not come forward for the payment of such
penalty;”;

(ii) sub-section (2) shall be omitted;

(iii) for sub-section (3), the following sub-section shall be substituted, namely:-

“(3) The proper officer detaining or seizing goods or conveyance shall

issue a notice within seven days of such detention or seizure,
specifying the penalty payable, and thereafter, pass an order within a
period of seven days from the date of service of such notice, for
payment of penalty under clause (a) or clause (b) of sub-section (1).”;

(iv) in sub-section (4), for the words “No tax, interest or penalty”, the words “No
penalty” shall be substituted;

(v) for sub-section (6), the following sub-section shall be substituted, namely:-

“(6) where the person transporting any goods or the owner of such goods
fails to pay the amount of penalty under sub-section(1) within fifteen
days from the date of receipt of the copy of the order passed under sub-
section (3), the goods or conveyance so detained or seized shall be liable
to be sold or disposed of otherwise, in such manner and within such time
as may be prescribed, to recover the penalty payable under
sub-section (3):
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Provided that the conveyance shall be released on payment by the transporter

of penalty under sub-section (3) or one lakh rupees, whichever is less:

Provided further that where the detained or seized goods are perishable or
hazardous in nature or are likely to depreciate in value with passage of time, the
said period of fifteen days may be reduced by the proper officer.”.
12. Amendment of section 130.-In section 130 of the principal Act,-
(a) in sub-section (1), for the words “Notwithstanding anything contained in
this Act, if ”, the word “Where” shall be substituted;
(b) in sub-section (2), in the second proviso, for the words, brackets and figures
“amount of penalty leviable under sub-section (1) of section 129”, the words
“penalty equal to hundred per cent. of the tax payable of such goods” shall be
substituted;
(c) sub-section (3) shall be omitted.
13. Substitution of new section for section 151.- For section 151 of the
principal Act, the following section shall be substituted, namely:-
“151. Power to call for information.-The Commissioner or an officer
authorized by him may, by an order, direct any person to furnish
information relating to any matter dealt with in connection with this Act,
within such time, in such form, and in such manner, as may be specified
therein.”.
14. Amendment of section 152.-In section 152 of the principal Act,-
(a) in sub-section(1),-
(i) the words “of any individual return or part thereof ” shall be
omitted;
(ii) after the words “any proceedings under this Act”, the words
“without giving an opportunity of being heard to the person
concerned” shall be inserted;
(b) sub-section (2) shall be omitted.

15. Amendment to Schedule II.- In Schedule II of the principal Act,

paragraph 7 shall be omitted and shall be deemed to have been omitted with effect
from the 1st day of July, 2017.
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The above translation of ಕರ್ನಾಟಕ ಸರಕು ಮತ್ತು ಸೇವೆಗಳ ತೆರಿಗೆ (ತಿದ್ದು ಪಡಿ)
ಅಧಿನಿಯಮ, 2021 (2021 ರ ಕರ್ನಾಟಕ ಅಧಿನಿಯಮ ಸಂಖ್ಯೆ : 39) be published in the official
Gazette under clause (3) of Article 348 of the Constitution of India.

THAAWARCHAND GEHLOT
GOVERNOR OF KARANATAKA

By Order and in the name of

the Governor of Karnataka,

G.SRIDHAR
Secretary to Government
Department of Parliamentary
Affairs and Legislation