Recommendations of 47th Meeting of GST Council

The GST Council’s 47th meeting was held in Chandigarh on 28th and 29th June, 2022 under the chairmanship of the Union Finance & Corporate Affairs Minister Smt. Nirmala
Sitharaman. The GST Council has inter-alia made the following recommendations relating to changes in GST rates on supply of goods and services and changes related to GST law and
procedure:

CHANGE IN GST RATES

CLARIFICATION OF GST RATES & SERVICES

A. GOODS
a) Electric vehicles whether or not fitted with a battery pack, are eligible for the concessional GST rate of 5%.
b) All fly ash bricks attract same concessional rate irrespective of fly ash content
c) Stones covered in S. No.123 of Schedule-I (such as Napa stones), even if they are ready to use and polished in minor ways [not mirror polished], attract concessional GST rate of 5%.
d) The GST rate on all forms of mango under CTH 0804, including mango pulp (other than mangoes sliced, dried) attract GST at the 12%.
e) Sewage treated water is exempted from GST and is not the same as purified water provided in S. No. 99 of notification 2/2017-CT(Rate). The word ‘purified’ is being omitted to make this amply clear.
f) Nicotine Polarilex Gum attracts a GST rate of 18%.

B. SERVICES
a) Due to ambiguity in GST rates on supply of ice-cream by ice-cream parlours, GST charged @ 5% without ITC on the same during the period 1.07.2017 to 5.10.2021shall be regularized to avoid unnecessary litigation.
b) Ginned or baled fibre is covered in entry 24B of notification No. 12/2017- Central Tax (Rate) dated 28.06.2017 in the category of raw vegetable fibres. The exemption under this entry is being rationalized.
c) Services associated with transit cargo both to and from Nepal and Bhutan are covered by exemption under entry 9B of notification No. 12/2017-CT(R) dated 28.06.2017.
d) Activity of selling of space for advertisement in souvenirs published in the form of books is eligible for concessional GST at 5%.
e) Renting of vehicle with operator for transportation of goods on time basis is classifiable under Heading 9966 (rental services of transport vehicles with operators)
and attracts GST at 18%.GST on such renting where cost of fuel is included in the consideration charged is being prescribed at 12%.

f) Allowing choice of location of a plot is part of supply of long term lease of plot of land. Therefore, location charge or preferential location charges (PLC) are part of
consideration charged for long term lease of land and shall get the same treatment under GST.
g) Services provided by the guest anchors to TV channels in lieu of honorarium attract GST.
h) Additional fee collected in the form of higher toll charges from vehicles not having FASTAG is essentially payment of toll for allowing access to roads or bridges to such
vehicles and shall be given the same tax treatment as given to toll charges.
i) Services in form of Assisted Reproductive Technology (ART)/ In vitro fertilization (IVF) are covered under the definition of health care services for the purpose of
exemption under GST.
j) Sale of land after leveling, laying down of drainage lines etc. is sale of land and does not attract GST.
k) Renting of motor vehicles for transport of passengers to a body corporate for a period (time) is taxable in the hands of body corporate under RCM.
l) The expression ‘public transport’ used in the exemption entry at SI No. 17(d) of notification No. 12/2017-CT(R), which exempts transport of passengers by public transport other than predominantly for tourism purpose, in a vessel between places located in India, means that such transport should be open to public for point to point transport [e.g. such transport in Andaman and Nicobar islands].

C. Other miscellaneous changes
a) All taxable service of Department of Posts would be subject to forward charge. Hitherto certain taxable services of Department of post were taxed on reverse charge basis.
b) Goods transport agency (GTA) is being given option to pay GST at 5% or 12% under forward charge; option to be exercised at the beginning of Financial Year. RCM option to continue.
c) Service provided by Indian Tour operator to a foreign resident for a tour partially in India and partially outside India is to be subject to tax proportionate to the tour conducted in India for such foreign tourist subject to conditions that this concession does not exceed half of tour duration.

Measures for Trade facilitation:

1. In-principal approval for relaxation in the provisions for suppliers making supplies through E-Commerce Operators (ECOs)
   I. Waiver of requirement of mandatory registration for person supplying goods through ECOs, subject to certain conditions, such as-
   i. the aggregate turnover on all India basis does not exceed the specified turnover,
   ii. the person is not making any inter-State taxable supply

II. Composition taxpayers would be allowed to make intra-State supply through e-commerce operators subject to certain conditions.

The details of the scheme will be worked out by the Law Committee of the Council. The scheme would be tentatively implemented with effect from 01.01.2023, subject to preparedness on the portal as well as by ECOs.

2. Amendment in formula prescribed in sub-rule (5) of rule 89 of CGST Rules, 2017 for calculation of refund of unutilized Input Tax Credit on account of inverted rated structure
   a. Change in formula for calculation of refund under rule 89(5) to take into account utilization of ITC on account of inputs and input services for payment of output tax on inverted rated supplies in the same ratio in which ITC has been availed on inputs and input services during the said tax period. This would help those taxpayers who are availing ITC on input services also.

3. In some cases where the exporter is identified as risky exporter requiring verification by GST officers, or where there is a violation of provisions of Customs Act, the refund claims in respect of export of goods are suspended/withheld.
4. Re-credit of amount in electronic credit ledger to be provided in those cases where erroneous refund amount sanctioned to a taxpayer on account of accumulated ITC by him along with interest and penalty, wherever applicable through a new FORM GST PMT-03A.

5. Clause (c) of section 110 and section 111 of the Finance Act, 2022 to be notified by Central Government at the earliest. These provisions relate to-
   a. retrospective amendment in section 50(3) of CGST Act, with effect from 01.07.2017,to provide that interest will be payable on the wrongly availed ITC only when the same is utilized;
   b. amendment in sub-section (10) of section 49 of CGST Act to provide for transfer of balance in electronic cash ledger of a registered person to electronic cash ledger of CGST and IGST of a distinct person.
6. Waiver of late fee for delay in filing FORM GSTR-4 for FY 2021-22 and extension of due date for filing FORM GST CMP-08 for Q1 of FY 2022-23:
   a. To extend the waiver of late fee under section 47 for delay in filing FORM GSTR-4 for FY 2021-22 by approximately four more weeks, i.e. till 28.07.2022 (The existing waiver is for the period from 01.05.2022 till 30.06.2022)
   b. To extend the due date of filing of FORM GST CMP-08 for the 1st quarter of FY 2022-23 from 18.07.2022 to 31.07.2022.

7. Present exemption of IGST on import of goods under AA/EPCG/EOU scheme to be continued and E-wallet scheme not to be pursued further.

8. Issuance of the following circulars in order to remove ambiguity and legal disputes on various issues, thus benefiting taxpayers at large:
   a. Clarification on issue of claiming refund under inverted duty structure where the supplier is supplying goods under some concessional notification.
   b. Clarification on various issues relating to applicability of demand and penalty provisions under the CGST Act in respect of transactions involving fake invoices.
   c. Clarification on mandatory furnishing of correct and proper information of inter-State supplies and amount of ineligible/blocked Input Tax Credit and reversal thereof in return in FORM GSTR-3B.
   d. Clarification in respect of certain GST related issues:
   i. Clarification on the issues pertaining to refund claimed by the recipients of supplies regarded as deemed export;
   ii. Clarification on various issues relating to interpretation of section 17(5) of the CGST Act;
   iii. Clarification on the issue of perquisites provided by employer to the employees as per contractual agreement;
   iv. Clarification on utilization of the amounts available in the electronic credit ledger and the electronic cash ledger for payment of tax and other liabilities.
9. Exemption from filing annual return in FORM GSTR-9/9A for FY 2021-22to be provided to taxpayers having AATO upto Rs. 2 crores.

10. Explanation 1 after rule 43 of CGST Rules to be amended to provide that there is no requirement of reversal of input tax credit for exempted supply of Duty Credit Scrips by the exporters.
11. UPI & IMPS to be provided as an additional mode for payment of Goods and Services Tax to taxpayers under Rule 87(3) of CGST Rules.
12. In respect of refunds pertaining to supplies to SEZ Developer/Unit, an Explanation to be inserted in sub-rule (1) of rule 89 of CGST Rules to clarify that “specified officer” under the said sub-rule shall mean the “specified officer” or “authorized officer”, as defined under SEZ Rules, 2006.
13. Amendment in CGST Rules to provide for refund of unutilized Input Tax Credit on account of Export of Electricity. This would facilitate the exporters of electricity in claiming refund of utilized.

14. Supplies from Duty Free Shops (DFS) at international terminal to outgoing international passengers to be treated as exports ITC on zero rated supplies by DFS and consequential refund benefit to be available to them on such supplies. Rule 95A of the CGST Rules, Circular No. 106/25/2019-GST dated 29.06.2019 and related notifications to be rescinded accordingly.
    

Measures for streamlining compliances in GST

1. Provision for automatic revocation of suspension of registration in cases where suspension of registration was done by the system for non-compliance once all the pending returns are filed on the portal by the taxpayer.
2. Proposal for comprehensive changes in FORM GSTR-3B to be placed in public domain for seeking inputs/suggestions of the stakeholders.
3. Time period from 01.03.2020 to 28.02.2022 to be excluded from calculation of the limitation period for filing refund claim by an applicant under section 54 and 55 of CGST Act, as well as for issuance of demand/ order (by proper officer) in respect of erroneous refunds under section 73 of CGST Act. Further, limitation under section 73 for FY 2017-18 for issuance of order in respect of other demands linked with due date of annual return, to be extended till 30th September, 2023.

The Press release can be accessed
at: https://www.pib.gov.in/PressReleasePage.aspx?PRID=1838020

Note: The recommendations of the GST Council have been presented in this release containing major item of decisions and the same would be given effect through relevant Circulars/ Notifications/ Law amendments which alone shall have the force of law.

Blog Credits- Blog credits – Shilpa Yadav and GST Team