February 28, 2023

Key takeaways from the 49th GST Council Meeting

The GST Council meeting was held for the 49th Time on 18th February 2023 under the chairmanship of the Hon’ble Union Finance & Corporate Affairs Minister. Key points of discussion were Clearance of Compensation cess dues to States, revision of GST rates of a few items, GST appellate tribunal and its structure, Capacity-based taxation and special composition scheme for certain sectors, and additional trade facilitation measures.

Key Takeaways from the 49th GST Council Meeting:

1. Measures for facilitation of trade

a. Extension of time limit for application for revocation of cancellation of registration.

Presently, as per Section 30 of the CGST Act read with Rule 23 of CGST Rules, 2017, the time limit for filing applications for revocation of cancellation of GST registration is 30 days from the date of cancellation of GST registration.
GST council has recommended enhancing such a time limit to 90 days.
Further, such a period of 90 days can be further extended by the commissioner or any other person authorized by him. The extension can be granted for a period not exceeding 180 days.

b. One-time amnesty for GST registration canceled earlier

GST Council has recommended that an amnesty may be provided for cases where registration has been canceled on account of non-filing of the returns, but the application for revocation of cancellation of registration could not be filed within the time specified in section 30 of the CGST Act.
Registered persons will be allowed to file an application for revocation by a specified date, subject to certain conditions.

c. Extension of filing of GST returns after best judgment assessment order under Section 62(2) of CGST Act, 2017

As per Section 62(1) of the CGST Act, is a registered person fails to furnish the GSTR-3B even after the service of a notice under section 46, the proper officer may determine the tax liability of such person to the best of his judgment considering all the relevant material which is available.
However, as per Section 62(2), if a registered person furnishes a valid return within 30 days from the date of the service of such assessment order then such assessment order shall be deemed to have been withdrawn. However, the liability of interest and late fee shall continue.
GST Council has recommended enhancing the time period of filing of valid returns from 30 days to 60 days. Such a period may also be further extended by another 60 days, subject to certain conditions.

d. Amnesty Scheme for filing of valid returns in case of best judgment assessment orders

The Council has also recommended providing an amnesty where the concerned GST return could not be filed within 30 days of the assessment order but has been filed along with due interest and late fee upto a specified date, irrespective of whether the appeal has been filed or not against the assessment order, or whether the said appeal has been decided or not.

e. Rationalization of Late fee for Annual Return

As per the present structure, a late fee for the filing of an Annual return (GSTR-9) is the least of the following, irrespective of turnover :
- INR 200 per day (INR 100 CGST & 100 SGST);
- 0.5% of turnover in the state or Union Territory (0.25% CGST + 0.25% SGST)

However, GST Council has recommended a revision in the Late fee of GSTR-9 from FY 2022-23 onwards based on Aggregate Turnover:

Aggregate Turnover in the concerned Financial year	Proposed Late Fee
Upto INR 5 Crores	Late fees shall be the least of the following: Rs. 50/day (Rs 25 CGST + Rs 25 SGST)0.04% of turnover in the state or UT (0.02% CGST + 0.02% SGST)
More than 5 Crores but upto INR 20 Crores	Late fees shall be the least of the following: Rs. 100/day (Rs 50 CGST + Rs 50 SGST)0.04% of turnover in the state or UT (0.02% CGST + 0.02% SGST)
More than 20 Crores	A late fee shall be the least of the followings: Rs 200 per day (INR 100 CGST & 100 SGST);0.5% of turnover in the state or Union Territory (0.25% CGST + 0.25% SGST)

f. Amnesty Scheme for Pending returns in FORM GSTR-4, FORM GSTR-9, and FORM GSTR-10

To provide relief to a large number of taxpayers, the Council recommended amnesty schemes in respect of pending returns in FORM GSTR-4 (Return for Composition Vendors), GSTR-9 (Annual return) & GSTR-10(Final Return).
Relief shall be provided in the form of conditional waiver or reduction of late fee.

g. Change in Place of supply in case of transportation of goods

As per Section 13(9) of the CGST Act, where the location of the supplier or location recipient is outside India, the place of supply for the transportation of goods is the place of destination of goods.
GST Council has recommended deleting this clause.
Therefore, the place of supply shall be the location of the recipient of the service.

2. Amendment in GST Rates

GST Council has recommended changing the GST rate on the following goods:

Goods	Existing GST Rate	Proposed GST Rate
Rab(Liquid Jaggery)	18%	5% – if sold pre-packaged and labeled Nil – if sold otherwise
Pencil Sharpener	18%	12%

Other changes relating to Goods and Services

GST on tracking devices fixed on durable containers will be brought down to nil, subject to conditions.
Council has also decided to regularize payment of GST on ‘rab’ during the past period on “as is basis” on account of genuine doubts over its classification and applicable GST rate.
The exemption granted to educational institutions and Central and State educational boards is extended for the conduct of entrance examinations to any authority, board, or body set up by the Central or State Government including the National Testing Agency (NTA) for entrance exams for admission to educational institutions.
Exemption extended to court & tribunal for RCM in respect of taxable services supplied by them such as renting of premises to telecommunication companies for installation of towers, renting of chambers to lawyers, etc.

3. Other Recommendations

The Government of India has taken one of the important decisions to clear the entire pending balance of GST Compensation for June 2022, of Rs. 16,982 crore due to states.
GST Appellate Tribunal and its structure

To Plug revenue leakage from commodities like pan masala, gutkha, and chewing tobacco, the Council approved the following recommendations of the GoM:

exports of such commodities are to be allowed only against LUT with a consequential refund of accumulated ITC.
the capacity-based levy not to be prescribed;
compliance and tracking measures to be taken to plug leakages/evasions
Compensation cess levied on such commodities to be changed from Ad valorem to specific tax-based levy.

DISCLAIMER: The views expressed are strictly of the author and VJM & Associates LLP. The contents of this article are solely for informational purpose. It does not constitute professional advice or recommendation of firm. Neither the author nor firm and its affiliates accepts any liabilities for any loss or damage of any kind arising out of any information in this article nor for any actions taken in reliance thereon.

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