52nd GST Council Meeting: All Details, Amendments & New GST Rates & Rulings

The 52nd GST Council Meeting took place today in Delhi under the chairmanship of Union Finance Minister Nirmala Sitharaman, where some important decisions and amendments were declared in the Goods and Services Act of India for things like GST rate of millet, extra neutral alcohol (ENA), molasses, alcohol used in industries, coastal vessels, zari, job works in barley processing and more. The GST council press release was held later to highlight the major changes.

Here are all the key highlights of the 52nd GST Council Meeting as mentioned in the GST Council press release were:

Age Tenure of the Members and Presidents of Appellate Tribunal

The constitution of the GST appellate tribunal court was passed in the 51st GST Council Meeting. GST council meeting by the authorities, and this time, at the 52nd GST Council Meeting, there are a few amendments in section 110 of the CGST Act 2017 added wrt. – the maximum age criterion of the president and the members of the tribunal. The GST council wants alignment of the CGST Act, 2017, with the Tribunal Reforms Act, 2021.

A person is eligible to be the tribunal president if they are of a maximum of age 70. A member’s maximum age limit is shifted from 65 years to 67 years. To be appointed to the tribunal, a member must be at least 50 years old.

Advocates should have a minimum of 10 years of experience in litigation in the Appellate Tribunal, Central Excise and Service Tax Tribunal, State VAT Tribunals, High Court, or Supreme Court. They can only be appointed as judicial members of the appellate, but they cannot be appointed as technical members.

GST Rate on Millets

The GST council wants to participate in the year of millets and, therefore, takes a significant step to promote millets that fall under HS1901. Food preparation of millets flow in powder form containing at least 75% of millets by weight; they will be charged a 0% GST. The millets should not be pre-packaged, meaning they can be sold in loose form or packaged without branding or labeling.

If the millets are sold pre-packaged or in a labeled form, a 5% GST will be charged on such category of millets.

GST on Extra Neutral Alcohol

Finally, a critical decision is taken after a long time on Extra Neutral Alcohol, a matter that has flared up implications on state and central relations. The GST council has now established the right to tax ENA to the states. If the states want to tax ENA, they can or otherwise not.

In the GST council press conference, while addressing the media, Sitharaman clearly stated that the right to tax the ENA lies solely with the GST council, neither the center nor the state. She established this fact with two judgments.

At the GST council press release, she added, “Despite having the legislative competence to tax ENA under the GST, the state is seeding the space or the power to the states on this matter.”

Previously, Allahabad High Courts had established that after the 101st constitutional amendment, the states do not have the right to tax the “Extra Neutral Alcohol” (ENA). ENA is the raw material for making alcohol for human consumption. So, by law, the GST council had the right to tax ENA. In another case, the attorney journal opined that the judgment in the case of Bihar distilleries case does not denude either the center or the state to levy GST on ENA.

GST on Molasses

GST on molasses has been reduced from 28% to 5%, hoping to benefit the sugarcane farmers and enable their cane dues to be cleared faster as more money will be left in their hands. This will also result in a reduction in the cost of manufacturing cattle feed.

GST On Alcohol Used as an Industrial Good

Due to the tweaking in the HS code for human liquor consumption, the rectified spirit, which is used in industrial use will now have a separate HS code. A separate tariff HS code has been created at the 8-digit level in the customs tariff to cover rectified spirit for industrial use.

The GST notification will be amended to create an entry for Extra-neutral alcohol for industrial use, which shall attract an 18% GST.

Exemption of IGST on Coastal Vessels

At the 52nd GST Council meeting, the GST Council recommends conditional and limited duration IGST exemption to foreign flag foreign going vessel when it converts to coastal run to promote tourism.

GST on Zari

At the 52nd GST Council Meeting, the council clarified that Zari items, imitation Zari thread, or yarn made from metalized polyester film /plastic film coming under HS 5605 will also attract 5% GST, just like the other Zari items. However, no refund will be allowed on polyester film (metalized) /plastic film because of inversion.

Job Work Services for Barley Processing into Molt

Any job work services provided for barley processing into molt, whether related to the liquor manufacturing industry or for food and products, will attract a 5% GST.

For Services by NTTs, the GST Council has exempted a GST charge on services of water supply, public health, sanitation conservancy, solid waste management, and slum improvement and upgradation supplied to Governmental Authorities. Further, it is also clarified at the 52nd GST Council Meeting that District Mineral Foundation Trust (DMFT) will also be considered as government authorities, and they will be exempt from all GST charges, the same as government authorities.

Services Provided by Indian Railways

The entire spectrum of services railways provide will now be charged GST subject to the forward charge basis, and ITC will also be available in discharging it. Certain exemptions provided when government agencies provide the services have now been withdrawn.

GST on Composite Services to Panchayat/ Municipality

Entries at Sl. No. 3 and 3A of notification No. 12/2017-CTR dated 28.06.2017 exempt pure and composite services provided to Central/State/UT governments and local authorities concerning any function entrusted to Panchayat/ Municipality under Article 243G and 243W of the Constitution of India. The GST Council has recommended retaining the existing exemption entries with no change.

Provision For Automatic Restoration of Provisionally Attached Property

GST law provided the provisional attachment of property under sub-rule (2) of Rule 159 of CGST Rules, 2017 and FORM GST DRC-22 during the pendency of the investigation, and the period provided was 1 year. Still, in the GST rules, it needed to be clearly mentioned that when the form is issued, a tenure of 1 year is applicable. This created a problem as when the attachment order was issued and sent to the bank; the bank did not release the provisionally attached account on expiry of 1 year. Instead, the bank waited for explicit orders from the tax authority.

It is clarified at the 52nd GST Council Meeting that the attachment form will now mention that it is valid for 1 year, or if the attachment is lifted prior, whichever date is earlier will be considered.

Clarification Regarding Export of Services

At the 52nd GST council meeting, clarifications are made regarding the eligibility of export remittances received in an RBI-permitted Special INR Vostro account. GST council recommends issuing a circular for determining whether the supply of services qualifies as an export of services under the provisions of sub-clause (iv) of clause (6) of section 2 of the IGST Act, 2017.

GST on Bus Transportation Services via ECOs

Since January 1, 2022, the liability to pay GST on bus transportation services supplied through Electronic Commerce Operators (ECOs) has been placed on the ECO under section 9(5) of the CGST Act, 2017. This trade facilitation measure was taken on the representation of the industry association that most of the bus operators supplying service through ECO owned one or two buses and needed to be able to accept registration and meet GST compliances.

To arrive at a balance between the need of small operators for ease of doing business and the necessity of large-organized players to take ITC, the GST Council at the 52nd GST Council Meeting has recommended that bus operators organized as companies may be excluded from the purview of section 9(5) of CGST Act, 2017. This would enable them to pay GST on their supplies using their ITC.

Issues of Place of Supply

The GST Council has recommended issuing a Circular to clarify the place of supply concerning the following supply of services:

(I) Supply of service of transportation of goods, including by mail or courier, in cases where the location of the supplier or the recipient of services is outside India.

(ii) Supply of advertising services.

(iii) Supply of the co-location services.

Facilitating IGST Refund for SEZ Units/Developers

The GST council has suggested amending Notification No. 1/2023-Integrated Tax dated 31.07.2023, effective 01.10.2023. This amendment aims to enable suppliers to Special Economic Zone (SEZ) developers or units engaged in authorized operations to supply goods or services (excluding commodities like pan masala, tobacco, gutkha, etc., (mentioned in the afore-mentioned Notification) to the SEZ developer or unit for authorized operations. This can be done by paying integrated tax and subsequently claiming a refund of the tax paid.

Amendment to ISD Procedure as Recommended in the 50th GST Council Meeting

During its 50th meeting, the GST Council recommended making the Input Service Distributor (ISD) procedure, as outlined in Section 20 of the CGST Act, 2017, mandatory prospectively for distributing Input Tax Credit (ITC). This mandate is for input services procured by the Head Office (HO) from third parties but attributable to both the HO and Branch Office (BO) or exclusively to one or more BOs.

The GST Council now suggests amendments to Section 2(61) and Section 20 of the CGST Act, 2017, as well as an amendment to Rule 39 of the CGST Rules, 2017, in this regard.

Measures to Facilitate Trade – Amnesty Scheme for Appeals Against Demand Orders

At the 52nd GST Council Meeting, the GST Council proposed introducing an amnesty scheme under a special procedure defined in Section 148 of the CGST Act, 2017. This scheme aims to assist taxable individuals who were unable to file an appeal under Section 107 of the same Act against demand orders issued under Section 73 or 74 of the CGST Act, 2017, either on or before March 31, 2023, or whose appeal against the ruling was solely rejected due to not being filed within the specified time frame in Sub-section (1) of Section 107.

In all such cases, taxpayers will be permitted to file appeals against these orders until January 31, 2024, with the condition of making a pre-deposit of 12.5% of the disputed tax amount, of which at least 20% (i.e., 2.5% of the disputed tax) should be debited from the Electronic Cash Ledger. This measure is expected to benefit many taxpayers who missed the previous appeal deadlines.

Clarifications on the Taxability of Personal and Corporate Guarantees

The GST Council has recommended clarifications regarding the taxability of personal guarantees offered by directors to banks against credit limits/loans sanctioned to their companies, as well as the taxability of corporate guarantees provided among related parties, including guarantees provided by holding companies to their subsidiary companies. These clarifications include:

(a.) Issuing a circular to clarify that when no consideration, either direct or indirect, is paid by the company to the director for providing a personal guarantee to the bank/financial institutions on their behalf, the open market value of this transaction/supply may be considered as zero. Therefore, no tax would be payable concerning such a supply of services.

(b.) Inserting sub-rule (2) in Rule 28 of the CGST Rules, 2017, to determine the taxable value of the supply of a corporate guarantee provided between related parties as one percent of the amount of such guarantee offered or the actual consideration, whichever is higher.

(c.) Clarifying through a circular that following the insertion of the proposed sub-rule (2) of Rule 28 of the CGST Rules, 2017, the value of such supply of services of a corporate guarantee provided between related parties will be governed by this sub-rule, irrespective of whether the recipient of services has full Input Tax Credit (ITC) available or not. These clarifications aim to clarify the tax implications of personal and corporate guarantees in various scenarios.

Conclusion

The 52nd GST Council Meeting can be concluded as a fruitful event for the Goods and Services Tax mandate for many reasons. Many amendments and changes in GST rates will likely bring a new light for the taxpayers. Interestingly, the GST council at the GST council press release did not mention the topic of 28% GST on online gaming, horseracing, and lotteries on a retrospective basis, which has been a topic of discussion by states like Delhi and Goa. It seems that the GST Council is firm about its decision on GST applicability to online gaming, a decision that happens to be the talk of the town.