Uttar Pradesh Amends GST Act to Align with Central Law and Introduce New Compliance Measures

The Uttar Pradesh Goods and Services Tax (Amendment) Act, 2025, an amendment Act, received the Governor's assent on August 21, 2025, following its passage by the Uttar Pradesh Legislature. This legislation was enacted to further amend the Uttar Pradesh Goods and Services Tax Act, 2017 (referred to as the principal Act). The primary reason for its enactment, as stated in the Statement of Objects and Reasons, was to incorporate amendments made in the Central Goods and Services Tax Act, 2017, at the State level, thereby ensuring uniformity between the Central and State GST frameworks. The Bill was introduced to replace the Uttar Pradesh Goods and Services Tax (Amendment) Ordinance, 2025, which had been promulgated by the Governor on July 10, 2025, due to the State Legislature not being in session and the necessity for immediate legislative action.

The Act introduces several key provisions and changes affecting taxpayers, registered persons, and appellate processes. Section 2 of the principal Act was amended to revise definitions, including the insertion of "fund" after "management of a municipal" in clause (69)(c), and detailed explanations for "local fund" and "municipal fund" to clarify their scope in relation to local self-governments and their civic functions. A new clause (116A) was inserted, defining "unique identification marking" as a secure, non-removable digital stamp or mark referred to in Section 148A(2)(b). Sections 12 and 13 saw the omission of sub-section (4). A significant amendment to Section 17(5)(d) clarified the term "plant or machinery" to "plant and machinery" for input tax credit purposes, with retrospective effect from July 1, 2017. This clarification, designated as Explanation 2, explicitly states that any reference to "plant or machinery" shall always be construed as "plant and machinery," notwithstanding any contrary judicial pronouncements. Section 20 was also amended to include references to sub-sections (3) or (4) of Section 5 of the Integrated Goods and Services Tax Act, 2017, effective from April 1, 2025.

Further changes include a new proviso in Section 34(2), which stipulates that a reduction in a supplier's output tax liability will not be permitted if the input tax credit attributable to a credit note has not been reversed by the recipient (if registered), or if the tax incidence has been passed on to another person in other cases. Section 38 was modified to replace "auto-generated statement" with "a statement" and to allow for other prescribed details. Section 39(1) was amended to introduce conditions and restrictions for filing returns. Crucially, new provisos were substituted in Section 107(6) and inserted in Section 112(8), mandating a pre-deposit of ten per cent of the penalty amount for appeals against orders demanding penalty without involving a demand for tax. A new Section 122B was inserted, imposing a penalty of one lakh rupees or ten per cent of the tax payable on goods (whichever is higher) for contravention of provisions related to unique identification marking under Section 148A. Section 148A itself was introduced, empowering the Government to specify goods and persons for unique identification marking, establish systems for affixation and electronic data storage, and prescribe related obligations for such persons. Lastly, Schedule-III was amended retrospectively from July 1, 2017, to include the supply of goods warehoused in Special Economic Zones or Free Trade Warehousing Zones before clearance for exports or to the Domestic Tariff Area. Section 15 clarifies that no refund will be made for tax collected that would not have been collected had the Schedule-III amendment been in force at all material times. The Act also repealed the Uttar Pradesh Goods and Services Tax (Amendment) Ordinance, 2025, while saving actions taken under it.

The legislative intent behind the Uttar Pradesh Goods and Services Tax (Amendment) Act, 2025, was to harmonize the State's GST law with the Central Goods and Services Tax Act, 2017, following recommendations from the GST Council. The legislation provided: “...to incorporate the amendments made in the Central Goods and Services Tax Act, 2017 at the State level and to maintain uniformity in the Central Act and the State Act.” This policy rationale aimed to address potential discrepancies and ensure a consistent tax regime across the nation. The earlier legal position under the Uttar Pradesh Goods and Services Tax Act, 2017, lacked these specific provisions, leading to statutory gaps, particularly concerning the interpretation of "plant or machinery" for input tax credit and the regulatory framework for unique identification markings on goods. The amendments introduce new obligations for businesses, such as the requirement to affix unique identification markings on specified goods and maintain related records, along with penalties for non-compliance. The changes to appeal procedures, requiring a pre-deposit for penalty-only orders, streamline the appellate mechanism while ensuring a degree of commitment from appellants. The retrospective application of certain provisions, such as those related to "plant and machinery" and SEZ/FTWZ supplies, aims to clarify the legal position from the inception of GST, resolving past ambiguities and potential disputes. The Act ensures that the State's GST framework remains robust, aligned with national policy, and responsive to evolving compliance needs.

Keywords: Uttar Pradesh GST, GST Amendment Act 2025, Goods and Services Tax, Unique Identification Marking, Input Tax Credit, Appellate Procedure, Tax Uniformity, SEZ, FTWZ, Plant and Machinery

Geo Tags: India, Uttar Pradesh District: Not Applicable