The state
of Manipur has significantly bolstered its Goods and Services Tax (GST)
framework by notifying the Manipur GST (Second Amendment) Ordinance, 2025.
Issued on October 7, 2025, the Ordinance aims to align the state's GST law with
the amendments recently introduced through the Central Finance Act, 2025,
and key decisions made during the 56th GST Council meeting.
This
comprehensive legislation focuses heavily on enhancing traceability, tightening
compliance, and resolving long-standing ambiguities regarding Input Tax Credit
(ITC). The major highlights include the introduction of a statutory
track-and-trace system, defined penalties for non-compliance, and a crucial
clarification on "plant and machinery."
1.
Mandatory Track-and-Trace System for Goods 🔎
A
significant and forward-looking feature of the Ordinance is the introduction of
Section 148A. This provision empowers the Government to mandate a
statutory track-and-trace mechanism for specified goods and classes of
persons, based on the GST Council’s recommendations.
- Mechanism: This system will require the affixation
of unique identification markings such as digital stamps or secure
marks. This is designed to ensure the complete traceability of goods
through the supply chain using electronic storage and access to
information.
- Compliance Requirement: Businesses dealing with these specified
goods must furnish detailed information and maintain accurate records,
including particulars of the machinery installed at their manufacturing
sites. The goal is to curb illicit trade and improve accountability.
2. New and
Stricter Penalties 💸
To enforce
the new compliance requirements, the Ordinance introduces Section 122B
into the Principal Act, prescribing specific penalties for violations of the
track-and-trace system.
- Penalty for
Non-Compliance: Any contravention of
the track-and-trace requirements will now attract a penalty equal to ₹1
lakh or 10% of the tax payable on such goods, whichever is higher.
This is in addition to any other penalties applicable under the Act,
signaling a serious approach to enforcement.
3. Critical
Clarification on Input Tax Credit (ITC)
One of the
most impactful changes is the amendment to Section 17(5)(d), which deals
with blocked credit. This amendment provides a retrospective clarification,
addressing widespread industry confusion and aligning the law with the intent
of the GST Council.
- The Change: The phrase "plant or
machinery" has been substituted with "plant and
machinery", with retrospective effect from the date GST was
introduced (July 1, 2017).
- Impact: This simple but critical word change
clarifies that all past and future references to the term must be read as
"plant and machinery," overriding any differing court rulings,
such as those that arose after the Safari Retreats case. The
clarification ensures that ITC restrictions are narrowed to civil
structures and permanently exclude the machinery installed within them,
resolving interpretative disputes in favor of genuine business expenditure
on machinery.
4.
Adjustments to Appellate Procedures 🏛️
The
Ordinance also refines the rules for filing appeals under the GST framework:
- Pre-deposit for
Penalties: Sections 107 and 112
are amended to mandate a 10% pre-deposit of the penalty amount when
taxpayers file appeals against orders that demand only penalties
and not tax dues. This tightens the procedural safeguards against
frivolous appeals.
5. Other
Procedural Alignments
Finally,
the Ordinance updates other procedural rules to ensure complete harmonization
with Central GST amendments:
- Special Economic Zones
(SEZs) and FTWZs: Procedural rules for
statements, returns, and Schedule III have been updated to include
specific transactions related to Special Economic Zones and Free Trade
Warehousing Zones (FTWZs).
- No Retrospective
Refunds: A clause is included
to prohibit the refund of any tax collected before these new provisions
related to SEZs and FTWZs take effect, maintaining financial stability
during the transition.
In
totality, the Manipur GST (Second Amendment) Ordinance, 2025, reflects a
concerted effort to make the state's tax system more robust, transparent, and
compliant with the broader national GST framework, focusing especially on
technological aid for traceability and crucial clarifications for businesses.
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