Manipur Goods and Services Tax Second Amendment Bill 2025

Manipur Goods and Services Tax Second Amendment Bill 2025

Why in News?

The Lok Sabha has passed the Manipur Goods and Services Tax (Second Amendment) Bill, 2025, aimed at updating provisions of the Manipur GST Act, 2017. The amendment also replaces the ordinance issued in October 2025, ensuring legal continuity and alignment with evolving GST regulatory requirements.

Key Provisions Introduced Under the Manipur Goods and Services Tax (Second Amendment) Bill, 2025

• Unique Identification: The Bill introduces a new framework that empowers the state government to mandate unique identification marking for selected goods. This mechanism may use a digital stamp, electronic mark, or any durable marking that cannot be removed once applied. The government may also roll out a digital platform that stores marking-related information so that enforcement agencies have quick access when required. Manufacturers may be asked to submit complete details of machinery used in their units. These details may include the machine identification number, production capacity, and total hours of operation during a given period. Any failure to follow these compliance rules may bring a penalty of ₹1,00,000 or 10% of the tax payable, whichever is greater.

• Credit Notes & Tax Liability: The Bill refines the rules for issuing credit notes in cases where goods or services are returned, overcharged, or found deficient. Suppliers can reduce their tax liability once the credit note is issued. The amendment adds a safeguard that avoids unintended revenue loss to the state. Under the new rule, a supplier cannot adjust tax liability if the recipient has already claimed Input Tax Credit (ITC) linked to that particular credit note and has not reversed it. The ITC must be availed only for genuine and verified transactions recorded on both ends of the supply chain.

• SEZ & FTWZ Warehouses: The Bill widens the list of activities that do not fall under the definition of “supply” under Schedule III of the Manipur GST Act. It covers the movement of goods stored inside Special Economic Zone or Free Trade Warehousing Zone warehouses. These goods may be supplied to any buyer before export or to units located in the Domestic Tariff Area. This amendment removes the need to impose State GST on such a movement. The amendment also reduces compliance load for businesses that operate in bonded storage areas.

• Pre-Deposit During Appeal: The Bill clarifies pre-deposit requirements for appeal cases where the order includes only a penalty and no tax demand. Previously, the Act did not provide clear differentiation for such cases. The amendment now states that a person must deposit 10% of the penalty when approaching the Appellate Authority. If the matter proceeds further to the Appellate Tribunal, the appellant must deposit another 10% of the penalty amount. This graded system offers uniformity and transparency for taxpayers.

Why the Manipur GST Act Needed Amendment?

• Alignment with Central Law Post-2025 Reforms: The central tax law — the Central Goods and Services Tax Act, 2017 (CGST Act) was significantly modified through the Finance Act, 2025, under Sections 121 to 134. These changes include new definitions, compliance rules, and procedural norms. The Manipur GST Act, 2017 required similar updates to avoid mismatch between state-level and central-level GST regulations. The Amendment Bill thus ensures that state law does not contradict the updated CGST.
• Replacement of Temporary Ordinance: Because the state was under President’s rule in 2025 and the state legislature was not in session, the state had issued the Manipur Goods and Services Tax (Second Amendment) Ordinance, 2025 on 7 October 2025. This was meant as a temporary measure to ensure continuity. The Bill formalises those changes and embeds them permanently in law.
• Need for Uniformity Across States: GST is a dual-structure tax with both central and state components. Uniform provisions across all states reduce legal uncertainty for businesses operating inter-state or across multiple states. By aligning with central GST amendments, the Manipur law ensures consistent definitions and compliance norms, which helps traders, manufacturers, and service providers operate without conflicting regulations.

Impacts on State GST Administration & Compliance Mechanism

• Strengths Monitoring: The amendment increases the capacity of the tax department to monitor goods more accurately. The state can now introduce unique identification marking for selected goods. This system helps officials track high-risk commodities. The state gains better visibility over supply chains. The amendment therefore reduces the chance of tax evasion.

• Improvement in ITC Verification: The amendment helps the administration check Input Tax Credit (ITC) more effectively. The rule states that a supplier cannot reduce tax liability if the recipient has already claimed ITC through a credit note and did not reverse it. This condition helps prevent duplicate claims. The administration gains a stronger legal basis to identify inconsistent records.

• Reduction of Burden: The amendment brings clarity on the tax status of goods stored inside Special Economic Zones and Free Trade Warehousing Zones. Officers can process such movements without examining complex tax liabilities. This reduces the workload on the department because earlier transactions in SEZ warehouses often created confusion about GST treatment.

• Clear Appeal Structure: The amendment clarifies pre-deposit rules for appeals where only penalty is involved. Tax officers gain a more predictable framework for processing appeals. This rule prevents misuse of the appeal system because only serious cases reach higher authorities. The administration can dispose of appeals faster because financial requirements are clearly defined.

• Transparent Compliance Framework: The amendment transforms the administration into a more data-centric system. Officers can use machine data, digital markings, and electronic records to verify compliance. This strengthens oversight and builds transparency. The administration can match production numbers with tax returns. This reduces hidden production and unreported turnover. This transparency supports long-term revenue stability for the state.