Recent Clarification on GST till 22nd January 2023

CBIC has empowered Additional Assistant Directors of GST Intelligence or Audit to act as Superintendents for the purpose of GST law. GSTN has made available the functionality of Letter of Undertaking (LUT) for FY 2023-24 on portal.

CBIC has already issued Notifications and clarifications Circulars to implement decisions of 48^th GST Council meeting held in December, 2022.

The Central Board of Indirect Taxes & Customs (CBIC) has got the approval to set up five in-house digital forensic laboratories in the Directorate General of GST Intelligence to facilitate investigations into tax evasion.

CBIC has issued two Circulars, viz Circular Nos. 189-190 dated 13.01.2023 to clarify various issues of taxability such as accommodation services by Air force Mess, incentive paid by MeitY to banks, Compensation Cess on SUV’s classification, carbonated beverages of fruit drink etc.

Classification of Rab under GST

• As per U.P. Rab (Movement Control Order), 1987, “Rab” means ‘massecuite prepared by concentrating sugarcane juice on open pan furnaces, and includes Rab Galawat and Rab Salawat, but does not include khandsari molasses or lauta gur.’
• Rab exists in semi-solid/liquid form, and is thus not covered under heading 1701.
• Rab being distinguishable from molasses, is not classifiable under heading 1703.
• It has been clarified that Rab is appropriately classifiable under heading 1702 attracting GST rate of 18% ( No. 11 in Schedule III of notification No. 1/2017-Central Tax (Rate), dated the 28th June, 2017). 

(Source: Circular No. 189/01/2023-GST dated 13.01.2023) 

GST on By-products of Milling of Dal / Pulses

• CBIC has clarified on applicable GST rate on by-products of milling of Dal/ Pulses such as Chilka, Khanda and Churi/Chuni.
• GST Council has already recommended exemption of such goods irrespective of its end use in its 48^th meeting on 17.12.2022.
• The said goods shall be exempt under GST vide S. No. 102C of schedule of notification No. 2/2017- Central Tax (Rate), dated 28.06.2017.
• Further, matters that arose during the intervening period are have been regularized on “as is” basis from the date of issuance of Circular No. 179/11/2022-GST, dated the 3rd August, 2022, till the date of coming into force of the above-said S. No. 102C and the entries relating thereto.

(Source: Circular No. 189/01/2023-GST dated 13.01.2023) 

Carbonated Beverages of Fruit Drink or Fruit Juice

• CBIC has that the applicable six-digit HS code for the goods with description ‘Carbonated Beverages of Fruit Drink’ or ‘Carbonated Beverages with Fruit Juice’ is HS 2202 99.
• The said goods attract GST at the rate of 28% and Compensation Cess at the rate of 12%.
• Further, an exclusion for the above-said goods has been provided in the entry at S. No. 48 of Schedule-II of
• notification No. 1/2017-Central Tax (Rate), dated the 28th June, 2017).
• , vide notification No. 12/2022-Central Tax (Rate), dated the 30th December, 2022. 

(Source: Circular No. 189/01/2023-GST dated 13.01.2023)

GST on Snack pellets

• CBIC on clarified on classification and applicable GST rate on snack pellets manufactured through the process of extrusion (such as ‘fryums’).
• Accordingly, it has been clarified that the snack pellets (such as ‘fryums’), which are manufactured through the process of extrusion, are appropriately classifiable under tariff item 1905 90 30, which covers goods with description ‘Extruded or expanded products, savoury or salted’, and thereby attract GST at the rate of 18% vide  No. 16 of Schedule-III of
• notification No. 1/2017-Central Tax (Rate), dated the 28th June, 2017).

(Source: Circular No. 189/01/2023-GST dated 13.01.2023) 

 Criteria for SUV’s for 22% Compensation Cess

• The GST Council in 48^th meeting held on 17.12.2022 clarified on the definition of sports utility vehicles (SUVs) that would attract the highest cess of 22 per cent, over and above the GST rates on cars.
• CBIC has now clarified on applicability of Compensation Cess to Sports Utility Vehicles (SUV’s) based on GST Council recommendation. It states specification of motor vehicles, which attract Compensation Cess @ 22 percent.
• Accordingly, it is clarified that Compensation Cess at the rate of 22 percent is applicable on motor vehicles, falling under heading 8703, which satisfy all four specifications, namely – these are popularly known as SUVs, the engine capacity exceeds 1500 cc, the length exceeds 4,000 mm, and the grounds clearance is 170 mm and above.
• Thus, in the case of SUVs, the clarification provides that the higher rate of compensation cess of 22 per cent is applicable to a motor vehicle fulfilling all four conditions — it is popularly known as SUV; has engine capacity exceeding 1,500cc; length exceeding 4,000 mm; has a ground clearance of 170 mm and above. This applies only to SUV’s.
• This clarification is confined to and applies only to SUVs.

(Source:Circular No. 189/01/2023-GST dated 13.01.2023) 

IGST rate on specified goods

• CBIC has clarified on applicable IGST rate on goods specified in the list annexed to notification No. 3/2017-Integrated Tax (Rate), dated the 28th June, 2017.
• IGST rate has been increased from 5% to 12% on goods, falling under any Chapter, specified in the list annexed to the
• notification No. 1/2017-Central Tax (Rate), dated the 28th June, 2017).
• , when imported for the specified purpose (like Petroleum operations/Coal bed methane operations) and subject to the relevant conditions.
• Some goods specified in the list annexed to notification No. 3/2017-Integrated Tax (Rate), dated the 28th June, 2017., are also eligible for a lower schedule rate of 5% by virtue of their entry in Schedule I of
• notification No. 1/2017-Central Tax (Rate), dated the 28th June, 2017)
• It has been clarified now that on goods specified in the list annexed to thenotification No. 3/2017-Integrated Tax (Rate), dated the 28th June, 2017., which are eligible for IGST rate of 12% under the said notification and are also eligible for the benefit of lower rate under Schedule I of the
• notification No. 1/2017-Central Tax (Rate), dated the 28th June, 2017)
• or any other IGST rate notification, the importer can claim the benefit of the lower rate. 

(Source: Circular No. 189/01/2023-GST dated 13.01.2023) 

GST on accommodation services by Air Force Mess

• CBIC has issued a clarification on applicability of GST on accommodation services supplied by Air Force Mess to its personnel.
• All services supplied by Central Government, State Government, Union Territory or local authority to any person other than business entities (barring a few specified services such as services of postal department, transportation of goods and passengers etc.) are exempt from GST vide Sl. No. 6 of notification No. 12/2017 – Central Tax (Rate) dated 28.06.2017.
• It has been clarified that accommodation services provided by Air Force Mess and other similar messes, such as, Army mess, Navy mess, Paramilitary and Police forces mess to their personnel or any person other than a business entity are covered by S.No. 6 of notification No. 12/2017 – Central Tax (Rate) dated 28.06.2017. provided the services supplied by such messes qualify to be considered as services supplied by Central Government, State Government, Union Territory or Local Authority.

(Source: Circular No. 189/01/2023-GST dated 13.01.2023)

GST on Incentive paid by MeitY to Banks

• CBIC has clarified on Applicability of GST on incentive paid by Ministry of Electronics and Information Technology (MeitY) to acquiring banks under Incentive Scheme for promotion of RuPay Debit Cards and low value BHIM-UPI transactions.
• Under such scheme, the Government pays the acquiring banks an incentive as a percentage of value of RuPay Debit card transactions and low value BHIM-UPI transactions up to Rs.2000/-.
• Under the Payment and Settlements Systems Act, 2007, banks and system providers cannot charge from charging any amount from a person making or receiving a payment through RuPay Debit cards or BHIM-UPI.
• The consideration for such services, instead of being paid by the merchant or the user of the card, is paid by the central government in the form of incentive.
• The incentive is in the nature of a subsidy directly linked to the price of the service and the same does not form part of the taxable value of the transaction in view of the provisions of section 2(31) and section 15 of the CGST Act, 2017.
• CBIC has therefore, clarified that incentives paid by MeitY to acquiring banks under the Incentive scheme for promotion of RuPay Debit Cards and low value BHIM-UPI transactions are in the nature of subsidy and thus not taxable.  

(Source: Circular No. 190/02/2023-GST dated 13.01.2023)

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