RECENT DEVELOPMENTS IN GST

[Dr. Sanjiv Agarwal]

GST is presently levied at different rates on Goods and service. These rate slabs contribute differently to overall revenue kitty, viz,

Tax Rate Slab	Contribution in total revenue
5%	10%
12%	8%
18%	65%
28%	16%

With the rate changes to be effective from 18^th July, 2022 based on 47^th meeting of GST Council recommendations, while the tax revenue will rise, impact of exemptions will further come down. It is high time that the rates are rationalized / narrowed in atleast 18 percent slab category. Government intends to prune GST exemption on various possible areas in goods and services, more so in service sector which now comprises of 59.2% of GDP and is now fastest growing sector.

When GST was introduced, there were over 80 categories of exempt services. GST Council had recommended withdrawing exceptions on may services such as those provided by the RBI, IRDA, SEBI, FSSAI, hotel accommodation priced up to Rs. 1000 / day and room rent (excluding ICU) exceeding Rs. 5000 per day per patient, beside others. Still the exemption list is very long.

GST Council has constituted a Group of Ministers (GoM) for looking into rationalization of GST rates and pruning a large number of exemptions on services over a period.

As the Council did not took a decision on continuity of compensation to states for GST revenue shortfall beyond 30^th June, 2022, there prevails a confusion amongst all states on the same. However, levy of GST compensation cess has been extended till 31^st March, 2026.

Consequent to the Council meeting, CBIC has issued six notifications, i.e., Notification No. 9 to 14/2022-CT, all dated 05.07.2022 to notify amendments. Further, CBIC has issued Circular Nos. 170 to 176, all dated 06.07.2022 to explain and clarify the changes. Further, Notifications No. 03 to 11/2022-CT (Rate), all dated 13.07.2022 have been notified to give effect to rate changes/ exemptions.

It is understood that CBIC may issue guidelines / standard operating procedure (SOP) on securing and handling summons and notices to prevent harassment of taxpayers and also to guide officers. It may also help monitoring of cases.

Ministry of Finance (TRU) has issued an ‘office memorandum’ on providing GST on final cost of Indian flag being supplied  under ‘Har Ghar Tiranga’ programme. It has been stated that ‘flag’ is already exempt from GST provided that flag conforms to the flag code 2002 as amended.

GST New Central Tax Notifications

Notification  No.	Amendment/details
09/2022-Central Tax dated 05.07.2022	To notify the provisions of clause (c) of section 110 and section 111 of the Finance Act, 2022
10/2022-Central Tax dated 05.07.2022	To exempt taxpayers having AATO upto Rs. 2 crores from the requirement of furnishing annual return for FY 2021-22
11/2022-Central Tax dated 05.07.2022	To extend due date of furnishing FORM GST CMP-08 for the quarter ending June, 2022 till 31.07.2022
12/2022-Central Tax dated 05.07.2022	To extend the waiver of late fee for delay in filing FORM GSTR-4 for FY 2021-22
13/2022-Central Tax dated 05.07.2022	To extend dates of specified compliances in exercise of powers under section 168A of CGST Act
14/2022-Central Tax dated 05.07.2022	To make amendments (First Amendment, 2022) to the CGST Rules, 2017
15/2022-Central Tax dated 13.07.2022	To amend notification No. 10/2019- Central Tax relating to Fly ash aggregates / blocks / bricks
16/2022-Central Tax dated 13.07.2022	To amend notification No. 14/2019- Central Tax relating to Fly ash aggregates / blocks / bricks

GST New Rate Notifications

CBIC has issued Rate Notifications (all dated 13^th July, 2022) to implement the rate change decisions of 47^th GST Council meeting. These are: 

Notification No	Subject / Amendment	Relating to
03/2022-CT (Rate)	To amend N.No 11/2017- CT(Rate) dated 28.06.2017	Amendment in tax rate for services
04/2022-CT (Rate)	To amend N.No 12/2017- CT(Rate) dated 28.06.2017	Changes in exemption of services
05/2022-CT (Rate)	To amend N.No 13/2017- CT(Rate) dated 28.06.2017	Changes in reverse charge mechanism
06/2022-CT (Rate)	To amend N.No. 1/2017- Central Tax (Rate)	Relating to GST exemption in goods
07/2022-CT (Rate)	To amend N. No. 2/2017- Central Tax (Rate)	Changes in GST rate of goods
08/2022-CT (Rate)	To amend N. No. 3/2017- Central Tax (Rate)	Change in GST rate from 5% to 12% on specified goods
09/2022-CT (Rate)	To amend N. No. 5/2017- Central Tax (Rate)	List of goods on which no refund will be available for inverted duty
10/2022-CT (Rate)	To amend N.No. 2/2022- Central Tax (Rate) rescinds	Change in GST rate (@ 6 % without GST) for fly ash bricks etc.
11/2022-CT (Rate)	N.No. 45/2017- Central Tax (Rate) rescinded	Removal of concessional GST rate on specified equipments

CBIC New Circulars

CBIC has issued following 07 (seven) Circulars, all dated 06.07.2022 clarifying the various amendments and Notifications issued to implement the decisions of 47th GST Council meeting held on 28-29, June, 2022:

Circular  No.	Amendment/details
Circular No. 170/02/2022-GST	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 and statement in FORM GSTR-1
Circular No. 171/03/2022-GST	Clarification on various issues relating to applicability of demand and penalty provisions under the Central Goods and Services Tax Act, 2017 in respect of transactions involving fake invoices.
Circular No. 172/04/2022-GST	Clarification on various issue pertaining to GST
Circular No. 173/05/2022-GST	Clarification on issue of claiming refund under inverted duty structure where the supplier is supplying goods under some concessional notification.
Circular No. 174/06/2022-GST	Prescribing manner of re-credit in electronic credit ledger using FORM GST PMT-03A.
Circular No. 175/07/2022-GST	Manner of filing refund of unutilized ITC on account of export of electricity.
Circular No. 176/08/2022-GST	Withdrawal of Circular No. 106/25/2019-GST dated 29.06.2019.

No Negative Liability for Composition Taxpayers: GSTN

1. GST system has removed the negative liability / balance from cash ledger in case of composition taxpayers.
2. A negative liability statement is a report available on GSTN portal which shows any negative summary in Form CMP-08 for the current quarter which will be carried forward to next quarter for adjustment against liability of next quarter.
3. It may be recalled that GSTN had in April, 2022 asked the taxpayers to deposit the amount equivalent to negative balance as shown in cash ledger, if any
4. Now, taxpayers can verify the balance and file their annual returns in GSTR-4 for the financial year 2021-22 by 28^th July, 2022.

(Source: GSTN)

Group of Ministers for GSTAT

• Ministry of Finance has constituted a Group of Ministers (GoM) on GST Appellate Tribunal (GSTAT), based on 47th GST Council meeting recommendations.
• GoM shall have Dy. Chief Minister of Haryana as Convenor
• The GoM on GSTAT shall recommend necessary amendments required in the GST Laws to ensure that the legal provisions-

1. maintain the right federal balance;
2. are in line with the overall objective of uniform taxation within the country; and
3. are in line with the principles outlined in judgements of Courts in relation to various aspects of Tribunal and are legally sustainable.

• GoM shall submit its report by 31st July, 2022

(Source: Office Memorandum No. A-50050/150/2018-CESTAT –DOR dated 06.07.2022 issued by Director State Taxes, Department of Revenue)

No GST on National Flag

• Sale / supply of the Indian national flag, irrespective of whether machine made or of polyester, is exempt from the Goods and Services Tax (GST). Hand-woven, hand-spun national flags made of cotton, silk, wool or Khadi are already exempt from GST.
• It has been clarified that the sale of the Indian National Flag, adhering to the Flag Code, 2002 and its subsequent amendments, is exempt from GST. On providing GST on final cost of Indian flag being supplied  under ‘Har Ghar Tiranga’ programme.

(Source: Office Memorandum F.No. 354/17/2022-TRU dated 08.07.2022 Issued by Ministry of Finance)