RECENT DEVELOPMENTS IN GST

[Dr. Sanjiv Agarwal]

The Indian core sector growth has been reported at 11.6% in August, 2021 against 9.9% in previous month due to recovery in infrastructure. This may accelerate in coming times. Core sector also recorded a 3.9% rise from pre-Covid level in August, 2019. This is despite expenditure rising in this month. Also, India’s net tax revenues have grown in first five months of current fiscal. Net tax collection is ₹ 6.45 lakh crore as against 2.84 lakh crore in 2020-21.  Fiscal deficit stands reduced accordingly. Fiscal defect is at 18 years low at 31.1% at August, 2021 end.

India’s exports jumped by 21.35% in September 2021 on YoY basis.  On the whole, exports, GST Collections, manufacturing PMI, advance tax collections all improved in September, 2021 signaling recovery. On the other hand, automobile sector, capital expenditure and investment showed contraction. On banking side, credit to retail segment has also grown by 12.1% in August, 2021 on YoY basis. Loans to MSME have also grown substantially.

The GST Council in its 45^th meeting on 17.09.2021,  took various decisions inter alia, including exemptions, rate rationalization, extension of relaxations to Covid supplies, exports, ITC, debit notes, late fees, inclusion of some goods / services in tax net and so on.  All such recommendations shall be implemented in due course. CBIC has already issued Notification Nos. 35 and 36-CT dated 24.09.2021 and few Circulars (Nos. 159 to 162) providing the much needed clarifications based on GST Council recommendations.

Based on the GST Council’s recommendation in 17.09.02021 meeting, CBIC has further issued seven new notifications on 30.09.2021 giving effect to change in tax rates and exemptions. These Notification Nos 6 to 12-CT (Rate) dated 30.09.2021 have been issued to give effect to recommendations.

On GST, collection of tax in the month of September, 2021 grew by 23% on YoY basis and was above ₹ 1 lakh crore bench mark for third month in a row in the back drop of lower collection in Q1 of 2021-22 due to Covid third wave.  The gross GST revenue collected in the month of September 2021 is  ₹ 1,17,010 crore of which CGST is ₹ 20,578 crore, SGST is ₹ 26,767 crore, IGST is ₹ 60,911 crore (including ₹ 29,555 crore collected on import of goods) and Cess is ₹ 8,754 crore (including ₹ 623 crore collected on import of goods).

The average monthly gross GST collection for the second quarter of the current year has been ₹ 1.15 lakh crore, which is 5% higher than the average monthly collection of ₹ 1.10 lakh crore in the first quarter of the year. This clearly indicates that the economy is recovering at a fast pace. Coupled with economic growth, anti-evasion activities, especially action against fake billers have also been contributing to the enhanced GST collections. It is expected that the positive trend in the revenues will continue and the second half of the year will post higher revenues.

We can expect that robust GST collection can continue in next quarter too if third wave does not come and adversely impact economy and businesses.

New Rate notifications issued on 30.09.2021

Based on 45^th GST Council’s recommendation held on 17.09.2021 CBIC has issued following notification bringing changes in GST rates / exemptions / payment of  tax.  Similar notifications have also been issued under IGST / UTGST.

• Amendment in Notification No. 11/2017-Central Tax (Rate) dated 28.06.2017:

Following changes in rate have been made w.e.f. 01.10.2021

S.No.	Series	Rate*
17	Temporary / permanent transfer or permitting use or enjoyment of IPRs	18%
26	Job works in relation to manufacture of alcoholic beverages for human consumption	18%
27	Other manufacturing services, publishing / presenting / reproduction services, material recovery services	18%
34	Admission to theme parks / water parks , go-carting, ballet Admission to casino / race clubs / sporting events	18%

(*include both CGST and SGST)

                       (Source: Notification No. 6/2021-CT (Rate) dated 30.09.2021)

• Amendment in Notification No. 12/2017-CT (Rate) dated 28.06.2021:

Following changes in the exemptions have been provided w.e.f. 01.10.2021

S.No.	Service
9AB	Services provided by and to Asian Football Confederation (AFC) and its subsidiaries directly or indirectly related to any of the events under AFC Women's Asia Cup 2022 to be hosted in India.
61A	Services by way of granting National Permit to a goods carriage to operate through-out India / contiguous States
82B	Services by way of right to admission to the events organised under AFC Women's Asia Cup 2022

(Source: Notification No. 7/2021-CT (Rate) dated 30.09.2021)

• Changes in Notification No. 1/2017-Central Tax (Rate) dated 28.06.2017:

Various changes in rate of GST on certain goods have been made many entries have been omitted w.e.f. 01.10.2021.

For details, please refer to notification.

(Source: Notification No. 8/2021-CT (Rate) dated 30.09.2021)

• Amendment in Notification No. 2/2017-CT (Rate) dated 28.06.2017 :

Following change has been made in Notification No. 2/2017-Central Tax (Rate) w.e.f. 01.10.2021:

Exemption at S. No. 86 is available for HSN Code 1209 – seeds, fruit and spores, of a kind used for sowing.

An explanation has been inserted that this will exclude ‘seeds meant for any use other than sowing’.

(Source: Notification No. 9/2021-CT (Rate) dated 30.09.2021)

• Amendment in Notification No. 4/2017-Central Tax (Rate) dated 28.06.2017 :

New entry 3A has been added for payment under reverse charge w.e.f. 01.10.2021 where goods involved are :

Following essential oils other than those of citrus fruit namely: -

1. of peppermint (Menthapiperita);
2. of other mints : Spearmint oil (exmenthaspicata), Water mint-oil (exmentha aquatic), Horsemint oil (exmentha sylvestries), Bergament oil (ex-mentha citrate) and supplier is any unregistered person and recipient is any registered person.

(Source: Notification No. 10/2021-CT (Rate) dated 30.09.2021)

• Amendment in Notification No. 39/2017-CT (Rate) dated 18.10.2017:

Following change has been made w.e.f. 01.10.2021:

Rate of GST shall be 5% on fortified rice kernel (premix) supply for ICDS or similar scheme duly approved by the Central Government or any State Government w.e.f. 01.10.2021 subject to conditions .

(Source: Notification No. 11/2021-CT (Rate) dated 30.09.2021)

• Exception to Covid related supplies extended :

Specified supplies in relation to Covid 19 relief material / medicines shall be taxed at concessional rate of GST for further period from 1.10.2021  to 31.12.2021. These goods and rates are as follows:

• Tocilizumab
• Amphotericin B
• Remdesivir
• Heparin (anti-coagulant)
• Itolizumab
• Posaconazole
• Infliximab
• Bamlanivimab & Etesevimab
• Casirivimab & Imdevimab
• 2-Deoxy-D-Glucose
• Favipiravir

(Source: Notification No. 12/2021-CT (Rate) dated 30.09.2021)

GST and Compensation Cess on Carbonated Beverages

• Based on GST Council’s 45th meeting recommendations, following rates have been notified for:
  •  Carbonated fruit beverages of fruit drink
  • Carbonated beverages with fruit juice
• GST rate                                             28%

 Rate of Compensation Cess           12%

  Total impact                                    40%

• Applicable HSN Code is 2202
• The above rates will be effective from 1 October, 2021.

[Source: Notification No. 8/2021-Central Tax (Rate) dated 30.09.2021;

Notification No. 1/2021-Compensations Cess (Rate) dated 30.09.2021]

Discussions to this article

[OmPrakash jain]

Sir,

1.Out of 19 items, where reduction of GST was allowed previously w.e.f. 14.6.2021, the CBIC has cleverly skipped 7 costly items w.e.f. 1.10.2021 and now reduced rates are applicable only for remaining 11 items as per Notfn No. 12/2021-CT(R) dated 30.9.2021, thus taxing all citizens of India, irrespective of COVID-19, in respect of remaining items w.e.f.1.10.2021.

Previously also, no relief was given to citizens of India, affected by COVID-19 in the months of March, 2021, April, 2021 & June-2021 up to 13.6.2021, for reasons best known to CBIC.

Moreover, no relief was given on GST (18) on Insurance premium for securing Health of Senior citizens of India.

This is how the CBIC is working at the cost on citizens of India.

2. Due to litigations all over India on taxability of Fruit based drinks containing less than 0.6% Of CO₂ and judgment of Supreme Court in favour of party previously, the CBIC has increased GST rate & also imposed Compensation Cess, on all carbonated Fruit based drinks/beverages by bringing them under HSN code 2202 irrespective of CO₂ percentage, just to boost up their Tax Kitty. The notable case laws on the subject matter are as under;

AJE India Pvt. Ltd. v. Union of India & Ors. - 2020 (12) TMI 1047 - BOMBAY HIGH COURT

Parle Agro (P) Ltd. v. Commissioner of Commercial Taxes - 2017 (5) TMI 592 - SUPREME COURT