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CMA Intermediate · Direct and Indirect Taxation · Exemption from Tax

Under section 11(3) of the CGST Act, 2017, the Government issues a notification inserting an explanation to clarify an earlier exemption notification. What is the effect and time limit of such an explanation?

An explanation clarifying an exemption notification must be inserted within one year of the issue of the original notification or order, and it takes effect as if it had always been part of that original notification, making it retrospective in operation.

  1. AIt operates only prospectively from its date, and may be inserted at any time within two years
  2. BIt has effect as if always part of the original notification, and must be inserted within one year of issue of that notificationCorrect
  3. CIt has effect as if always part of the original notification, and may be inserted at any time without limit
  4. DIt operates only prospectively and must be inserted within six months

Explanation

Section 11(3) allows an explanation to clarify scope or applicability, inserted by notification at any time within one year of issue of the original notification or order. Every such explanation has effect as if it had always been part of the first notification. So it is retrospective, and the one-year limit applies.

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