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CMA Intermediate · Direct and Indirect Taxation · Exemption from Tax

The Government issued an exemption notification under Section 11(1) of the CGST Act in March. In which case can an Explanation clarifying its scope be inserted under Section 11(3) with retrospective effect from the original notification?

Under Section 11(3), the Government may insert a clarifying Explanation by notification within one year of issuing the original exemption notification or special order. Such an Explanation takes effect as if it had always been part of the original notification or order, so it operates retrospectively.

  1. ABy notification issued within one year of the issue of the original notificationCorrect
  2. BBy notification issued at any time within five years of the original notification
  3. CBy a circular issued by the Board at any time
  4. DBy notification issued within six months, and only with effect from the date of the Explanation

Explanation

Section 11(3) allows an Explanation to be inserted by notification at any time within one year of the issue of the notification or order. The Explanation has effect as if it had always been part of the first notification or order. The five-year and prospective options contradict this rule.

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