52nd GST Council Meeting, held on October 7, 2023, brought forth several noteworthy recommendations and amendments. These recommendations encompass various aspects of Goods and Services Tax (GST) in India, impacting services, goods, and other essential measures. In this comprehensive article, we will delve into the key takeaways from this crucial meeting and analyze their implications.
A. GST On Services
1. E-Commerce Operators (ECOs): Imposing a liability on e-commerce operators (ECOs) to pay GST under Section 9(5) of the CGST Act in connection with bus transportation services supplied through them from 1st January 2022.
| Taxable Supply | Taxable Party | Period |
| Bus transportation services supplied through ECOs | e-commerce operators (ECOs) | 1st January 2022 onwards
|
2. Clarifications regarding taxability of personal guarantee: A Circular to be issued to provide for the following:
- The open market value of a transaction wherein no consideration is paid by the company to the director in any form for providing a personal guarantee to a bank or financial institution on behalf of the company shall be zero, and no tax will therefore be levied on such a supply of service by the director to the company.
- Sub-Rule 2 shall be inserted in Rule 28 of the CGST Rules to state that in the case of a corporate guarantee provided between related parties, the value on which GST will apply shall be the higher of the following:
a. 1% of the total guarantee amount, or
b. The actual consideration if any paid for such guarantee.
- The value of supply services of corporate guarantee between related parties will be governed by Rule 28(2) after its insertion.
| Nature Of Supply | Supplier | Receiver | Value of supply |
| Corporate Guarantee | Director | Company | > Zero, if no consideration is involved;
> If consideration is paid to the director, 1% of the total guarantee amount or consideration received, whichever is higher. |
| Corporate Guarantee | Related Party | Related Party | 1% of the total guarantee amount or consideration received, whichever is higher |
3.Clarification on various issues related to Place of Supply: A circular to be issued to clarify the place of supply in connection with the following services:
- Advertising services;
- Co-location services;
- Transportation of goods including mail or courier, in cases where the location of the supplier and the recipient of the services is outside India.
4.Issuance of clarification relating to export of services-: A circular to clarify the admissibility of export remittances received in Special INR Vostro account, as permitted by RBI, for the purpose of consideration of supply of services to qualify as export of services in terms of the provisions of sub-clause (iv) of clause (6) of section 2 of the IGST Act, 2017.
5. It is clarified that District Mineral Foundations Trusts (DMFT) set up by the State Governments across the country in mineral mining areas are Governmental Authorities and thus eligible for the same exemptions from GST as available to any other Governmental Authority.
6. GST at 5% for job-work services for processing barley into malt.
7. The supply of goods and services through Indian Railways will be taxed under the forward charge mechanism, and ITC for the same shall be available.
8. It is proposed to retain the existing exemption entries under Notification No. 12/2017-CTR dated 28.06.2017 in connection with pure and composite services provided to Central/State/UT governments and local authorities in relation to any function entrusted to Panchayat/ Municipality under Articles 243G and 243W of the Constitution of India.
9. Recommended to exempt services of water supply, public health, sanitation conservancy, solid waste management and slum improvement and up-gradation supplied to Governmental Authorities.
B. GST On Goods:
1. Millets: From a notified date, the rate of tax in connection with millet flour in powdered form for food preparation containing at least 70% millets by weight falling under HS 1901 will be 0% if sold without a brand name and 5% if sold under a brand name.
| Goods | Rate Of Tax | Condition | Applicable Date |
| Millet Flour | 0% | > Should contain at least 70% millets by weight
> Should not be sold under a brand name. |
To be notified |
| Millet Flour | 5% | > Should contain at least 70% millets by weight
> If sold under a brand name |
To be notified |
2. Imitation Zari: Imitation zari thread or yarn made out of metalized polyester film /plastic film, falling under HS 5605, is covered by the entry for imitation zari thread or yarn attracting a 5% GST rate. No refund will be allowed on polyester film (metalized) /plastic film on account of inversion.
3. Conditional Exemption to Foreign Vessel: With a view to promoting tourism, a foreign-flag foreign-going vessel will be given a conditional exemption from IGST when it converts to a coastal run and reconverts to a foreign-going vessel again within 6 months.
4. Extra Neutral Alcohol: Extra-Neutral Alcohol (ENA) used for manufacture of alcohol for human consumption will be kept out of the purview of GST. ENA for other industrial use to attract GST at 18% from a notified date
5. Molasses: GST on molasses to reduce to 5% from 28%.
C. Other Important Measures
1. Amnesty Scheme for filing of appeals: An amnesty scheme is being extended to assessees to file an appeal on or before 31st January 2024 in the following cases:
- The assessee could not file an appeal with an appellate authority under Section 107 of the CGST Act against an order under Section 73 or 74 of the CGST Act, passed on or before 31st March 2023, or
- The assessee’s appeal was rejected solely on the ground that it was not filed within the time period specified in Section 107(1) of the CGST Act.
However, an assessee who makes use of the amnesty scheme will have to pre-deposit 12.5% of the disputed amount, out of which at least 20%, i.e., 2.5% of the pre-deposit, shall be deposited from the Electronic Cash Ledger.
|
Applicability |
Conditions | Period of extension |
| > Where an appeal could not be filed with an appellate authority under Section 107 of the CGST Act against an order under Section 73 or 74 of the CGST Act, passed on or before 31st March 2023.
> Where an appeal was rejected solely on the ground that the said appeal was not filed within the time period specified in Section 107(1) of the CGST Act |
Make a pre-deposit of 12.5% of the disputed amount, out of which at least 20%, i.e., 2.5% of the pre-deposit, shall be deposited from the Electronic Cash Ledger | Appeal can be filed on or before 31st January 2024 |
2. Provision for automatic restoration of provisionally attached property after completion of one year: Rule 159(2) of the CGST Rules and Form GST DRC 22 shall be amended to provide that the order for provisional attachment in FORM GST DRC-22 shall not be valid after expiry of one year from the date of the said order.
3. Amendment to Notification 01/2023-Integrated Tax dated 31.07.2023:
Notification 01/2023-Integrated Tax dated 31.07.2023 to be amended w.e.f. 01.10.2023 to provide for supplies of goods or services (except the commodities like pan masala, tobacco, gutkha, etc. mentioned in the Notification 01/2023-Integrated Tax dated 31.07.2023) to a Special Economic Zone developer or a Special Economic Zone unit for authorized operations on payment of integrated tax, which can be claimed by way of refund subsequently.
4. Alignment of provisions of the CGST Act, 2017 with the provisions of the Tribunal Reforms Act, 2021
An amendment to Section 110 of the CGST Act is proposed to provide for the following:
- The minimum age for eligibility for appointment as President and Member shall be 50 years;
- The President shall have tenure up to a maximum age of 70 years and Members up to a maximum age 67 years, respectively.
- An advocate having 10 or more years of experience in litigation under indirect tax laws in the Appellate Tribunals, High Court, or Supreme Court shall be eligible for the appointment as a judicial member.
|
GST Tribunal Member |
Minimum Age To Become Member | Tenure -Maximum Age | Conditions |
| President | 50 | 70 | – |
| Members | 50 | 67 | – |
| Advocate | 50 | 67 | Can apply to become a judicial member provided the advocate has experience of 10 or more years in litigation under indirect tax laws in the Appellate Tribunals, High Court or Supreme Court |
5. Amendment with respect to ISD as recommended by the GST Council in its 50th meeting: Amendments to Section 2(61) and Section 20 of CGST Act, 2017 along with Rule 39 of CGST Rules, 2017 is proposed to state that ISD (Input Service Distributor) procedure as laid down in Section 20 of the CGST Act, 2017 may be made mandatory prospectively for distribution of ITC in respect of input services procured by Head Office (HO) from a third party but attributable to both HO and Branch Office (BO) or exclusively to one or more BOs.
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Disclaimer: The observations made above are based on my understanding of the law. The adjudicating authorities, courts etc may have a completely different view on the same. The information provided in this tax alert does not, and is not intended to constitute legal advice. Instead, all information and content herein are for general informational purposes only.
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