RECENT DEVELOPMENTS IN GST

[Dr. Sanjiv Agarwal]

Nobody would have imagined that the GST Council’s 47^th meeting outcome will have so much impact on the countrymen and country that even the functioning of Parliament will be disrupted. It looks like there are certain decisions which lead to ponder that the present tax policy is not for public good but only for making tax revenue collection good.

The tax on certain items of mass consumption was was avoidable had the people in North Block thought that it would impact the masses and in the present day situation, where covid risk still persists, family incomes are low and not growing, interest rates low, inflation high, ….such a hike on house hold items including kitchen consumables could have been deferred. It is also not the time to tinker with the GST scheme for the present.

It appears that the only consideration in mind has been ‘tax revenue’ and not the country. This also reveals from decisions like taxing all hotel rooms, hospital rooms, residential dwelling etc. The need is to curb tax evasion as well so that tax on essential items is minimal. It would be desirable that the Central Government rolls back such GST levy for the time being till normally is regained.

CBIC issued various rate Notifications (Notification No. 3 to 11 all dated 13.07.2022) which are effective from 18.07.2022.

It would not be out of context that it is high time that Government accepts its accountability and discloses to the nation the utilization of tax proceeds with full transparency and to the extent disclosing details as much as possible. The use of tax must get reflected in the form of deliverables, not just Government expenditure.

Changes in relation to ‘fly ash’ goods

• Notification No. 10/2019 (CT) dated 07.03.2019 as amended by Notification No.  3/2022-CT dated 31.03.2022 gives exemption from registration for any person engaged in specific supply of goods and whose tax aggregate turnover in the financial year does not exceed Rs. 40 lakh. This included “fly ash bricks or fly ash aggregate with 90% or more fly ash content; fly ash blocks”.
• Notification No. 14/2019-CT dated 07.03.2019 as amended by Notification No. 4/2022-CT dated 31.03.2022 extended the limit of threshold of aggregate turnover for availing composition scheme u/s 10 of CGST Act, 2017 to Rs. 1.50 crore for “fly ash bricks or fly ash aggregate wit 90% or more fly ash content, fly ash blocks”.
• Notification No. 15/2022-CT and 16/2022-CT both dated 13.07.2022 have substituted these goods with “fly ash bricks, fly ash aggregates and fly ash blocks” (w.e.f. 18.07.2022)

(Source: Notification No. 15/2022 and 16/2022-Central Tax, both  dated 13.07.2022)

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

GST on ‘pre-packaged’ and ‘labelled’ goods

• GST has been made applicable on specified ‘pre-packaged’ and ‘labelled’ goods w.e.f. 18 July, 2022 attracting the provisions of Legal Metrology Act, 2009. The rate of tax (GST) shall be 5% (e.g., on flour, rice, wheat, curd, lussi, puffed rice……)
• Supply of such specified commodities having the following two attributes would  attract GST:

1. It is pre-packaged; and
2. It is required to bear the declarations under the provisions of the Legal Metrology Act, 2009 and the rules made thereunder

• Thus, food articles would fall within the purview of the definition of 'pre-packaged commodity' under the Legal Metrology Act, 2009, and the rules made thereunder, if such pre-packaged and labelled packages contained a quantity upto 25 kilogram [or 25 litre]
• GST would apply on such specified goods where the pre-packaged commodity is supplied in packages containing quantity of less than or equal to 25 kilogram.
• GST would apply to a package that contains multiple retail packages.
• GST would apply when prepackaged and labelled package is sold by a distributor/ manufacturer to such retailer. However, if for any reason, retailer supplies the item in loose quantity from such package, such supply by retailer is not a supply of packaged commodity for the purpose of GST levy.
• Tax is not payable if such packaged commodities are supplied for consumption by industrial consumers or institutional consumers.

(Source: MoF -TRU Letter No. F. No. 190354/172/2022 dated 17.07.2022)

Mandatory HSN Codes in GSTR-1 return

• Vide Notification No. 78/2020 – Central Tax dated 15th October, 2020, it is mandatory for the taxpayers to report minimum 4 digits or 6 digits of HSN Code in Table-12 of GSTR-1 on the basis of their Aggregate Annual Turnover (AATO) in the preceding Financial Year.

• GSTN is implementing the same in phases. Part I has already been done w.e.f. 01.04.2022

Taxpayers with AATO of upto Rs. 5 crore	Taxpayers with AATO of more than Rs. 5 crore
Taxpayers are required to mandatorily report 2-digit HSN codes for goods & services. Manual user entry is allowed for entering HSN or description and warning or alert message shall be shown in case of manual HSN. However, taxpayers will be able to file GSTR-1 after manual entry	Taxpayers are required to mandatorily report 4-digit HSN codes for goods & services. Manual user entry is allowed for entering HSN or description and warning or alert message shall be shown in case of incorrect HSN code. However, taxpayers will be able to file GSTR-1 after manual entry

• Part II shall be made available on the portal w.e.f. 01.08.2022

Taxpayers with AATO of up-to Rs.  5 crore

Taxpayers with AATO of more than Rs. 5 crore

Same as above (To continue as it is)

Taxpayers will now have to mandatory report 6-digit HSN code. No change in other conditions Taxpayers would be required to mandatorily report 6-digit HSN code. Manual user entry would be allowed for entering HSN or description and in case of a wrong HSN reporteda warning or alert message will be shown. However, taxpayers will still be able to file GSTR-1. Taxpayers would be expected to correct HSN where there is an error and a warning message shown.

(Source: GSTN dated 20.07.2022)

Reporting supplies u/s 9(5) of in GSTR-3B  return

• GSTN has introduced new Table 3.1.1 in GSTR-3B return for reporting supplies under section 9(5) of the CGST Act, 2017.
• According to section 9(5) of CGST Act, 2017, Electronic Commerce Operator (ECO) is required to pay tax on supply of certain services notified by the government such as Passenger Transport Service, Accommodation services, Housekeeping Services & Restaurant Services, if such services are supplied through ECO.
• For reporting of such supplies a new Table 3.1.1 has been added in GSTR-3B as per Notification No. 14/2022 – Central Tax dated 05th July, 2022 wherein both ECOs and registered persons can report their supplies made under section 9(5) respectively.
•  Details of supplies notified under sub-section (5) of section 9 of the Central Goods and Services Tax Act, 2017 and corresponding provisions in IGST/SGST/UTGST Acts is as under:

• Taxable supplies on which electronic commerce operator pays tax under Sub-section (5) of Section 9 [To be furnished by the electronic commerce operator
• Taxable supplies made by the registered person through electronic commerce operator, on which electronic commerce operator is required to pay tax under Sub-section (5) of Section 9 [To be furnished by the registered person making supplies through electronic commerce operator].

• An ECO is required to report supplies made u/s 9(5) in Table 3.1.1(i) of GSTR-3B and shall not include such supplies in Table 3.1(a) of GSTR-3B. The applicable tax on such supplies shall be paid by ECO in Table 3.1.1(i) of GSTR-3B in cash only and not by ITC.
• A registered person who is making supplies of such services as specified u/s 9(5) through an ECO, shall report such supplies in Table 3.1.1(ii) and shall not include such supplies in Table 3.1(a) of GSTR-3B. The registered person is not required to pay tax on such supplies as the ECO is liable to pay tax on such supplies.
• The Table 3.1.1 in GSTR-3B will be made available on GST Portal from 01st August 2022.

(Source: GSTN dated 20.07.2022)

Exemption from integrated tax & compensation cess on import under Advance Authorisation, EPCG and EOU Schemes

Consequent upon issue Notification No. 37/2022-Customs dated 30.06.2022, the Central Government has amended para 4.14, Para 5.01 (a) and Para 6.01(d)(ii) of FTP 2015-20 to provide exemption from Integrated Tax and Compensation Cess under Advance Authorization, EPCG Scheme and EOU scheme respectively.

(Source: Notification No. 16/2015-20 dated 01.07.2022)