BUSINESS @ 49TH GST COUNCIL MEETING

[Dr. Sanjiv Agarwal]

The 49^th meeting of highly empowered GST Council was held on 18^th February, 2023, amid rumors of getting postponed to March first week owing to budget sessions in few states. However, it did took place. While it could not dwell upon taxation of online gaming, the Council did took some important decisions on rationalization of  tax rates, late fees, revocation of cancellation of registration, best judgment assessment etc.

Major Decisions

In 49^th GST meeting held on 18.02.2023 following important decisions/recommendations were made:

1. To clear entire pending balance of Rs. 16,982 crore of June, 2022 of compensation cess from own sources to be recouped from future cess collection.
2. Adoption of GoM report on GST Appellate Tribunal with modifications.
3. Approval of GoM report on capacity based taxation and special composition scheme for specified sectors (e.g., pan masala, gutkha, chewing tobacco).
4. No GST on services by National Testing Agency for conducting entrance examination for admission to educational institutions.
5. Time limit for applying for revocation of cancellation of registration to be increased from 30 days to 90 days.
6. Rationalization of  payment of late fees for annual return
7. One time amnesty scheme to be launched for pending returns in Form GSTR-4, GSTR-9 and GSTR-10.
8. Payment under reverse charge for services provided by Courts / Tribunals in respect of taxable services supplied by them (e.g. on renting of chambers to lawyers, renting of premises to telecom companies.
9. Amendment in best judgment assessment provision (section 62) by extending time limit of 30 days by another 60 days subject to conditions, to enable deemed withdrawal.
10. Rationalization of ‘place of supply’ rule for transportation of goods [Section 13(19) of IGST Act, 2017] so as to provide that  the place of supply of services of transportation of goods, in cases where location of supplier of services or location of recipient of services is outside India, shall be the location of the recipient of services.

Compensation Cess

Central Government has decided to clear the entire pending balance GST compensation of Rs. 16,982 crore for June, 2022. Since, there is no amount in the GST compensation Fund, Centre has decided to release the amount from its own resources and the same will be recouped from the future compensation cess collection. With this release, Centre will be clearing the entire provisionally admissible compensation due for five years as envisaged in the GST (Compensation to States) Act, 2017. Centre shall also clear the admissible final GST compensation to those States who has provided the revenue figures as certified by the Accountant General of the States amounting to Rs. 16,524 crore.

Capacity based Taxation

The GoM had recommended that:

• the capacity based levy not to be prescribed;
• compliance and tracking measures to be taken to plug leakages/evasions;
• exports of such commodities to be allowed only against LUT with consequential refund of accumulated ITC;
• compensation cess levied on such commodities to be changed from ad valorem to
• specific tax based levy to boost the first stage collection of the revenue.

Revocation of Cancellation of Registration

Section 30 of the CGST Act, 2017 has been recommended to be amended to provide for extension of time limit for application for revocation of cancellation of registration and to provide for amnesty in case of past cases. Such amendment will provide that :

• the time limit for making an application for revocation of cancellation of registration be increased from 30 days to 90 days;
• where the registered person fails to apply for such revocation within 90 days, the said time period may be extended by the Commissioner or an officer authorised by him in this behalf for a further period not exceeding 180 days.

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

Best Judgment Assessment

The Council has recommended amendment in section 62 of the CGST Act, 2017 which provides for best judgment assessment  to extend timelines under sub-section (2) thereof and one time amnesty for past cases: As per section 62(2) of CGST Act, 2017, the best judgment assessment order issued under sub-section (1) of section 62 is deemed to be withdrawn if the relevant return is filed within 30 days of service of the said assessment order. Section 62 will be amended so as to increase the time period for filing of return for enabling deemed withdrawal of such best judgment assessment order, from the present 30 days to 60 days, extendable by another 60 days, subject to certain conditions.

Further, it has also recommended to provide an amnesty scheme for conditional deemed withdrawal of assessment orders in past cases where the concerned 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 appeal has been filed or not against the assessment order, or whether the said appeal has been decided or not.

Rationalization of late fees for Annual Return

Presently, late fee of Rs 200 per day (Rs 100 CGST + Rs 100 SGST), subject to a maximum of 0.5% of the turnover in the State or UT (0.25% CGST + 0.25% SGST), is payable. Late fee for delayed filing of annual return in FORM GSTR-9 for FY 2022-23 onwards, for registered persons having aggregate turnover in a financial year upto Rs 20 crore, will be as follows:

• Registered persons having an aggregate turnover of up to Rs. 5 crores in the said financial year: Rs 50 per day (Rs 25 CGST + Rs 25 SGST), subject to a maximum of an amount calculated at 0.04 per cent. of his turnover in the State or Union territory (0.02% CGST + 0.02% SGST).
• Registered persons having an aggregate turnover of more than Rs. 5 crores and up to Rs. 20 crores in the said financial year: Rs 100 per day (Rs 50 CGST + Rs 50 SGST), subject to a maximum of an amount calculated at 0.04 per cent. of his turnover in the State or Union territory (0.02% CGST + 0.02% SGST).

Amnesty for pending Returns

GST Council has recommended amnesty schemes in respect of pending returns in FORM GSTR-4, FORM GSTR- 9 and FORM GSTR-10 by way of conditional waiver/ reduction of late fee.

These recommendations / decisions shall be implemented in due course by way of Amendments / Notifications / Circulars.