| Highlights of the 48th GST Council Meeting |
The foremost agenda of the 48th GST Council meeting was to bring clarity on certain teething issues faced by the trade and industry. The Council has also introduced measures for trade facilitation and streamlining GST compliances. The key decisions taken by GST Council in the said meeting are as follows:
| GST rate related proposals |
- GST rate on husk of pulses has been reduced to NIL and the GST rate on ethyl alcohol has been reduced to 5%.
- Clarification proposed with regard to the HSN classification of Rab (rab-salawat) and fryums.
- Only such vehicles which have all the four attributes viz. popularly known as SUV, having engine capacity exceeding 1500 cc, length exceeding 4000 mm and a ground clearance of 170 mm or above, will attract a higher rate of compensation cess of 22% (clarification to be issued to make an exhaustive list).
- GST under Reverse Charge Mechanism (RCM) shall not be payable where a residential dwelling is rented to a registered person in his/her personal capacity for use as his/her own residence and not on account of its business.
- Clarification to be issued to state that incentives paid to banks by the Central Government under the scheme for the promotion of RuPay Debit Cards and low-value BHIM-UPI transactions are in the nature of subsidy and thus not taxable.
| Measures for facilitation of trade |
- The Council has recommended raising the minimum threshold of tax amount for launching prosecution under GST from INR 10 million to INR 20 million, except for cases involving fake invoices.
- It has been recommended to decriminalize offenses such as obstruction or preventing any officer in the discharge of his duties, deliberate tampering of material evidence, and failure to supply the information.
- Implementation of a scheme allowing unregistered suppliers and composition taxpayers to make an intra-state supply of goods through e-commerce operators has been deferred to 1 October 2023.
- Supplies of goods from a place outside the taxable territory to another place outside the taxable territory, high sea sales and supply of warehoused goods before their home clearance covered under Schedule III of CGST Act to be deemed as inserted retrospectively from 1 July 2017 (clauses inserted on 1 February 2019). It has been further clarified that no refund of tax paid will be available in cases where any tax has already been paid on such supplies during the period 1 July 2017 to 31 January 2019.
- Provisions related to Input Tax Credit (ITC) reversal on account of non-payment to the vendor to be amended retrospectively from 1 October 2022 to allow the benefit of partial reversal, only to the extent of an amount not paid.
- Mechanism to be prescribed for reversal of ITC by a registered person in the event of non-payment of tax by the supplier by a specified date and the manner for re-availing of such reversed ITC if the supplier pays tax subsequently.
- Facility for withdrawal of an appeal, up to a specified stage, to be introduced.
- Facility to apply for cancellation of registration to be provided to persons who are required to collect tax at source or deduct tax at source.
| Measures for streamlining compliances in GST |
- Biometric-based Aadhaar authentication and risk-based physical verification will be conducted on a pilot basis in Gujarat to reduce the number of fake and fraudulent GST registrations.
- OTP-based verification to be conducted based on the mobile number and email address available in the Central Board of Direct Taxes (CBDT) database for a particular PAN to avoid/restrict misuse of PAN without the knowledge of the PAN holder.
- A registered person will not be able to file monthly returns (including the return for tax deducted at source), including annual returns under GST, after the expiry of three years from the due date of filing such return/s.
- Form GSTR-1 to be amended to allow reporting of supplies made through e-commerce operators and also reporting of supplies by E-commerce operators on which the e-commerce operator becomes liable to pay tax.
- Without the intervention of tax officers, taxpayers will be issued intimations on the common portal to communicate the difference in liability between GSTR-1 and GSTR-3B. Taxpayers failing to pay such differential amounts or explain the reason for differences through the common portal will not be allowed to file GSTR-1 for subsequent tax periods.
- To reduce interpretation issues and litigation on taxation of Online Information and Database Access or Retrieval Services (OIDAR) services, the definition of ‘non-taxable online recipient’ and ‘OIDAR’ will be amended.
| Clarification/Circular to be issued for |
- Procedure to allow the filing of refund applications by unregistered buyers in the event of cancellation of contract/agreement in relation to supply of services, such as the construction of flat/house or long-term insurance policy and where the time period of issuance of credit note by the supplier has lapsed.
- Submission of a certified copy of the order while filing an appeal and the issuance of final acknowledgment by the Appellate authority.
- ‘No Claim Bonus’ to be allowed as a deduction for the valuation of insurance services.
- Treatment of statutory dues under GST law in respect of the taxpayers for whom the proceedings have been finalized under the Insolvency and Bankruptcy Code, 2016.
- It has also been recommended that proviso to Section 12(8) of the IGST Act may be omitted. Thus, issues revolving around the eligibility of ITC on account of the place of supply being shifted to outside India as per the said proviso shall get resolved.
- Verification of ITC in case of mismatch between ITC availed in Form GSTR-3B vis-à-vis ITC appearing in GSTR-2A during FY 2017-18 and 2018-19.
- The manner of re-determination of demand in the event that the Appellate Authority/Appellate Tribunal concludes that the notice issued is not sustainable on account of the absence of fraudulent intent or wilful misstatement or suppression, the matter will be adjudicated without invoking an extended period of limitation.
- Applicability of e-invoicing with respect to an entity.
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Our Comments
- The GST Council took up certain ambiguous issues and clarified them to prevent future disputes and litigation. The agenda related to GST Tribunal could not be taken up due to paucity of time. Non-setting up of the GST Tribunal is hurting the taxpayers, especially exporters whose refund is stuck due to negative order by tax authorities.
- Removal of ambiguity with respect to GST applicability on transactions covered in Schedule III inserted from 1 February 2019 but made effective from 1 July 2017 will reduce unnecessary litigations being initiated for the interim period. However, much to the dismay of taxpayers who paid taxes to avoid any non-compliances, they are devoid of claiming refunds.
- The recommendation to delete the proviso to Section 12(8) of the IGST Act will finally clear the ambiguity created regarding ITC eligibility on account of the place of supply being a foreign country as against the registered place of business of the recipient.
- One of the most controversial issues plaguing the industry is demands raised by tax officers because of the mismatch of ITC between GSTR-3B and GSTR-2A for FY 2017-18 and FY 2018-19. The recommendation of the Council to prescribe a procedure/guidelines for verification hopefully would help to check the high-handedness of GST officers who have been blindly disregarding the contentions of the taxpayers.
- We will have to wait and watch whether the move to directly communicate with the taxpayers regarding the intimation of a difference in liability reported in GSTR-1 and GSTR-3B and subsequent response by the taxpayers without the intervention of GST officers would facilitate or add to the existing compliance burden of the taxpayers.
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