Recent Clarifications In GST: Updates on Rates, Evasion and E-Invoicing

Dr. Sanjiv Agarwal 03 Aug 2023 2,097 Views 0 comment Print Goods and Services Tax | Articles

51st GST Council meeting has been held on 2^nd August, 2023, just within three weeks of the last meeting on 11 July, 2023. The urgency for such meeting appears from the fact that Government is keen to levy GST at the earliest on e-gaming, casinos, races etc and would not like to lose revenue. The tax rate decided is @28% but industry is opposing the same. The valuation and charging provisions which is a challenge, was discussed.

In one of the answers to questions in Parliament, Finance Minister has revealed that 2784 cases of GST evasion were detected in April – May 2023 involving Rs. 14302 crore of tax. There were 28 arrests in 2022-23, 15602 GST evasion cases amounted to Rs. 131613/- crore and recovery of Rs. 33226 crore. The Government has unleashed many measures to plug the problem of tax evasion including risk parameter based tracking and use of artificial intelligence.

W.e.f. 1^st August 2023, e-invoices have been made mandatory for smaller taxpayers whose aggregate annual turnover has exceeded Rs. 5 crore during any financial year from 2017 onwards w.e.f. 01.08.2023, the threshold turnover shall be Rs. 5 crore (Rs. 10 crore).

Recent Clarifications In GST

After bunch of Circulars, CBIC has issued a series of rate Notifications and other Notifications, i.e., Notification Nos. 6 to 10 (Rate) dated 26.07.2023 and Central Tax Notification Nos. 27 to 35, all dated 31.07.2023 and IGST Notification No. 1/2023-IGST dated 31.07.2023. These pertain to rate changes, exemptions and GTA services. Compensation Cess on various tobacco products and utility vehicles have also been prescribed. Others relate to Rule 4A non-applicability to Puducherry, turnover based exemption to filing of annual return, account aggregators, exemption to e-commerce operators from registration and adjudication powers. Special procedure has also been prescribed to be followed by registered persons engaged in manufacturing of certain goods and for registered persons as per directions of Supreme Court in Filco Trade Centre case (Transition Credit). Also, provisions of section 137 to 162 of Finance Act, 2023 have been notified for enforcement. GSTN has also issued few advisories for taxpayers.

GST Collection for the month of July, 2023 is Rs. 1655105 crore with a 11% YoY growth. The tax collection has crossed Rs. 1.6 lakh crore for the 5^th time since July, 2017. The revenues for the month of July 2023 are 11% higher than the GST revenues in the same month last year. During the month, the revenues from domestic transactions (including import of services) are 15% higher than the revenues from these sources during the same month last year. It is for the fifth time, the gross GST collection has crossed Rs. 1.60 lakh crore mark.

CBIC clarification on GST Rates / Classification of Goods

CBIC has issued following clarifications regarding GST rates and classification of certain goods based on the recommendations of the GST Council in its 50th meeting held on 11th July, 2023.

Applicability of GST on un-fried or un-cooked snack pellets, by whatever name called, manufactured through process of extrusion:

Supply of uncooked/ un-fried extruded snack pellets, by whatever name called, falling under CTH 1905 will attract GST rate of 5% vide S. No. 99B of Schedule I of Notification No. 1/2017-Central Tax (Rate), dated the 28th June, 2017 with effect from 27th July,2023.
Extruded snack pellets in ready- to-eat form will continue to attract 18% GST under S. No. 16 of Schedule III of Notification No. 1/2017-Central Tax (Rate), dated the 28th June, 2017.
The issue for past period upto 27.7.2023 is hereby regularized on “as is” basis.

Applicability of GST on Fish Soluble Paste

Fish soluble paste attracted 18% under the residual entry S No. 453 of Schedule III of Notification No. 1/2017-Central Tax (Rate), dated the 28th June, 2017.
GST on fish soluble paste, falling under CTH 2309, has been reduced to 5%. Accordingly, the rate has been notified vide S. No. 108A with effect from 27th July, 2023.
The issue for past period upto 27.7.2023 is hereby regularized on “as is” basis.

Desiccated coconut- Regularisation of the issue for past period from 01.07.2017 up to and inclusive of 27.07.2017:

In view of the prevailing genuine interpretational issues regarding the applicability of GST rate on the desiccated coconut, falling under CTH 0801, the issue for past period from 01.07.2017 up to and inclusive of 27.07.2017 is hereby regularized on “as is” basis.

Biomass briquettes- Regularisation of the issue for past period from 01.07.2017 up to and inclusive of 12.10.2017:

In view of the prevailing genuine interpretational issues regarding the applicability of GST rate on the Biomass briquettes, falling under any chapter, the issue for past period from 01.07.2017 up to and inclusive of 12.10.2017 is hereby regularized on “as is” basis.

Supply of raw cotton by agriculturist to cooperatives:

Supply of raw cotton, including kala cotton, from agriculturists to cooperatives is a taxable supply and such supply of raw cotton by agriculturist to the cooperatives (being a registered person) attracts 5% GST on reverse charge basis under notification no. 43/2017-Central Tax (Rate) dated 14th November, 2017.
The issue for the past periods prior to issue of this clarification is hereby regularized on “as is basis”.

GST rate on imitation zari thread or yarn known by any name in trade parlance:

Imitation zari thread or yarn known as “Kasab” or by any other name in trade parlance, would attract a uniform GST rate of 12% under tariff heading 5605.
GST on imitation zari thread or yarn known by any name in trade parlance has been reduced from 12% to 5%. Accordingly, the rate has been notified vide S. No. 218AA with effect from 27th July, 2023.
In view of the confusion in the trade regarding the applicability of GST rate on these products, the issue for past period upto 27.7.2023 is hereby regularized on “as is” basis.

Plates, cups made from areca leaves

Issues relating to GST on plates and cups made from areca leaves are hereby regularized on “as is basis” for the period prior to 01.10.2019.

GST rate on goods falling under HSN 9021

On GST rates applicable to trauma, spine and arthroplasty implants falling under HSN heading 9021 for the period before 18.07.2022 stating, there are interpretational issues due to the duality of rates on similar items leading to ambiguity.
The issue has arisen as prior to 18.07.2022 there existed two rates on the goods falling under HSN heading 9021 as per S. No. 257 of schedule I and S. No. 221 of schedule II of Notification No. 01/2017-CT (Rate) dated 28.06.2017.
The GST rate on all such goods falling under heading 9021 would attract a GST rate of 5% and in view of prevailing genuine doubts, the issue for the past periods is hereby regularized on “as is basis”.
No refunds will be granted in cases where GST has already been paid at higher rate of 12%.

No refunds will be granted where GST has already been paid in all the above cases.

[Source: Circular No. 200/12/2023 –GST dated 01.08.2023]

Clarification on levy of GST on specified services

CBIC has clarified on levy of GST on:

Services supplied by director of a company in his personal capacity such as renting of immovable property to the company or body corporate are subject to Reverse Charge mechanism
Services supplied by a director of a company or body corporate to the company or body corporate in his private or personal capacity such as services supplied by way of renting of immovable property to the company or body corporate are not taxable under RCM.
Only those services supplied by director of company or body corporate, which are supplied by him as or in the capacity of director of that company or body corporate shall be taxable under RCM in the hands of the company or body corporate under Notification No. 13/2017-CTR (Sl. No. 6) dated 28.06.2017.

Supply of food or beverages in cinema hall is taxable as restaurant service
Supply of food or beverages in a cinema hall is taxable as ‘restaurant service’ as long as:
- the food or beverages are supplied by way of or as part of a service, and
- supplied independent of the cinema exhibition service.
Where the sale of cinema ticket and supply of food and beverages are clubbed together, and such bundled supply satisfies the test of composite supply, the entire supply will attract GST at the rate applicable to service of exhibition of cinema, the principal supply.

[Source: Circular No. 201/13/2023 –GST dated 01.08.2023]

GSTN Advisory on E-invoice Exemption Declaration

GSTN has enabled E-Invoice Exemption Declaration (EED) functionality on e-invoice portal

This is specifically designed for taxpayers who are by default enabled for e-invoicing but are exempted from implementing it under the CGST (Central Goods and Services Tax) Rules.
EED functionality is voluntary and can be accessed at the e-Invoice portal (www.einvoice.gst.gov.in ).
It is applicable to taxpayers who are exempted from e-Invoicing as per the provisions of the CGST Rules.
Any declaration made using this functionality will not change the e-Invoice enablement status of the taxpayer.
The facility to report exemption declaration is purely for business facilitation purposes.

[Source: GSTN Advisory dated 24.07.2023 (www.gst.gov.in)]

GSTN – New ITC tab for Rule 86B

GSTN has introduced a new tab, i.e., Rule 86B which enables restriction on use of amount towards input tax credit available in the Electronic Credit Ledger (ECL)
Under Rule 86B of CGST Rules, 2017, there is a restriction of 99% imposed on the Input Tax Credit (ITC) available in the Electronic Credit Ledger of a registered person.
In other words, 1% of the output liability must be paid in cash.
The limitation will be applicable when the value of taxable supply, excluding exempt and zero-rated supply, in a month exceeds Rs. fifty lakh rupees.

(Source: GSTN Portal)

GSTN : New tabs for registration

GSTN has introduced new tabs in ‘state specific information’ sector
These relate to Consumer Agreement (CA) number or Electricity Consumer (EC) number, as the case may be.
It may be noted that it is now mandatory for all applicants to provide their CA/EC numbers while applying for GST registration.
Taxpayers should ensure to provide such information while applying for registration.

(Source: GSTN Portal)

New IRPs for E-invoice

GSTN has issued an advisory on services offered by four new IRPs for invoice reporting
There are:
- - Cygnet-IRP (https://einvoice3.gst.gov.in)
  - Clear-IRP (https://einvoice4.gst.gov.in)
  - EY-IRP (https://einvoice5.gst.gov.in)
  - IRIS-IRP (https://einvoice6.gst.gov.in)
E-Invoice reporting and IRN (Invoice Reference Number) generation services by all IRPs, including the 4 new IRPs, are provided free of charge. There are no fees associated with using these essential services for generating and reporting e-Invoices. The IRPs are mandated to offer e-Invoice reporting and IRN generation as part of their compliance process, ensuring that taxpayers can avail these services without incurring any additional cost.
Any additional Value-Added Services (VAS) offered by IRPs are independent of the standard e-Invoice reporting and IRN generation and may have associated charges. GSTN has no role in the provision or pricing of such Value-Added Services.
These include ERP plug in, data transfer through FTP / SFTP & reconciliation of GSTR-1 data, invoice storage for more than 48 hours etc.
Tax payers should review the details of the services, data security and their associated costs as offered by the respective IRPs.
In addition to the four new IRPs, e-Invoice reporting and IRN generation services are also provided by NIC-IRP. Users can access these services at https://einvoice1.gst.gov.in and https://einvoice2.gst.gov.in.

(Source: GSTN Portal dated 02.08.2023)

Conclusion: The recent clarifications in GST demonstrate the government’s commitment to strengthening the tax system and curbing evasion. While some changes aim to boost revenue, others offer clarity to businesses to ensure smooth operations. Taxpayers must stay updated with these changes to comply with the GST regulations effectively. The measures taken by the government indicate a progressive approach towards tax administration, benefiting both the government and taxpayers in the long run.