RECENT DEVELOPMENTS IN GST

[Dr. Sanjiv Agarwal]

According to RBI’s monetary policy announced on 9^th October, 2024, inflation has moderated and inflation and growth balance is well poised. RBI looks at FY 2025 GDP growth at 7.2% and that India’s growth story remains intact.

To implement the 54^th GST Council’s decision, CBIC has issued a number of Notifications both on rate and non-rate. Notification Nos. 5 to 9 (Rate) have been issued for change of rate and reverse charge mechanism on renting of non-residential dwelling by unregistered person. Notification Nos. 20 to 25 under Central tax have been issued to amend CGST Rules, waiver of interest and penalties under new section 128A, late fees for GSTR-7 form, Reverse Charge on metal scrap and property renting, special procedure for rectification of order by registered persons, TDS of 2%  on supply of metal scrap by registered person in case of B2B supplies etc.

In one of the landmark judgments (Safari Retreat), Supreme Court has held that if the building is constructed for supplying services such as renting or leasing, it can be regarded as a plant and input tax credit (ITC) under CGST law could be allowed. In other words, if the construction of a building was essential for carrying out the activity of supplying services, such as renting or giving on lease or other transactions in respect of the building or a part thereof, the building could be held to be a ‘plant’. It also upheld the constitutional validity of provision relating to blocked credit. CBIC has also issued clarificatory Circulars on various amendments and decisions, viz, Circular Nos. 234 to 238.

Gross GST collection in September, 2024 have once again recorded a growing trend but the growth is only 6.5% (net collection grew by 3.9%) which is the slowest growth in current fiscal. The gross collection in September, 2024 is Rs. 1.73 trillion as compared to 1.62 trillion in September, 2023. Similarly, net GST collection stood at Rs. 1.52 trillion in September, 2024 against Rs. 1.47 trillion in same month in 2023. It is expected that with festive season ahead in October – November, 2024, GST collection may go up in next 2-3 months.

New Rules / Forms Prescribed

• The CBIC has amended / inserted the following Rules for CGST Rules, 2017 :

Rule No.	Amendment / Insertions / Omission	Effective Date	Remarks
36	In sub-rule (3) after the words “suppression of facts”, the words and figures “under section 74” shall be inserted	08.10.2024	The words “under Section 74” has been inserted in the rules prescribed for documentary requirements and conditions for claiming ITC
46	After clause (s), the second proviso shall be omitted in the third proviso, for the words “Provided also that in the case of”, the words “Provided further that in the case of” shall be substituted	01.11.2024	Omission of consolidated invoice at end of month for tax payable under RCM.
47A	New Rule inserted – “Time limit for issuing tax invoice in cases where recipient is required to issue invoice.– Notwithstanding anything contained in Rule 47, where an invoice referred to in Rule 46 is required to be issued under clause (f) of sub-section (3) of section 31 by a registered person, who is liable to pay tax under sub-section (3) or sub-section (4) of section 9, he shall issue the said invoice within a period of thirty days from the date of receipt of the said supply of goods or services, or both, as the case may be.”	01.11.2024	New Rule inserted for issuance of invoice for tax paid by recipient under RCM.
66	In sub-rule (1) after the word, letters and figure “FORM GSTR-7”, the words “, on or before the tenth day of the month succeeding the calendar month,”	01.11.2024	Time limit for filing Form GSTR-7 prescribed
86	In sub-rule (4B), in clause (b), the words, brackets and figures “in contravention of sub-rule (10) of rule 96,” shall be omitted	08.10.2024	In Rules for Electronic Credit Ledger, Omission of the words “in contravention of sub-rule (10) of rule 96,”
88B	In sub-rule (1), after the words and figures “or section 74”, the words, figures and letter “or section 74A” shall be inserted	01.11.2024	Insertion of “or section 74A” in the rules for manner of calculating interest on delayed payment of tax.
88D	In sub-rule (3), after the words and figures “or section 74”, the words, figures and letter “or section 74A” shall be inserted	01.11.2024	Insertion of “or section 74A”
89	in sub-rule (4),– in clause (B), the words, brackets, figures and letters “other than the input tax credit availed for which refund is claimed under sub-rules (4A) or (4B) or both” shall be omitted; in clause (C), the words, brackets, figures and letters “, other than the turnover of supplies in respect of which refund is claimed under sub- rules (4A) or (4B) or both” shall be omitted; in clause (E), for the long line beginning with the word “excluding” and ending with the words “during the relevant period”, the words “excluding the value of exempt supplies other than zero rated supplies during the relevant period” shall be substituted; sub-rules (4A) and (4B) shall be omitted in sub-rule (5), in the Explanation, in clause (a), the words, brackets, figures and letters “other than the input tax credit availed for which refund is claimed under sub-rules (4A) or (4B) or both” shall be omitted	08.10.2024	Omissions sub-rule 4A and 4B and reference thereof of.
96	sub-rule (10) shall be omitted	08.10.2024	Omission of conditions of claiming refund of integrated tax paid on export
96B	In sub-rule (1), for the words and figures “section 73 or 74” the words, figures and letters “section 73 or section 74 or section 74A” shall be substituted with effect from the 1st day of November, 2024	08.10.2024	Effect of introduction of Section 74A provided in the Rule
121	The words and figures “proceedings under section 73 or, as the case may be, section 74”, the words, figures and letter “proceedings under section 73 or section 74 or section 74A, as the case may be,” shall be substituted	01.11.2024	Effect of introduction of Section 74A provided in the Rule
142	in sub-rule (1) in clause (a) and (b), in sub-rules (1A), (2B), (4) and (5) after the words and figures “or section 74”, the words, figures and letter “or section 74A” shall be inserted; in sub-rule (2), for the words, brackets and figures “or, as the case may be, tax, interest and penalty in accordance with the provisions of sub-section (5) of section 74”, the words, brackets, figures and letters “or clause (i) of sub-section (8) of section 74A, as the case may be, or tax, interest and penalty in accordance with the provisions of sub-section (5) of section 74 or clause (i) of sub-section (9) of section 74A” shall be substituted; for sub-rule (3), the following sub-rule shall be substituted, namely: –– “(3) Where the person chargeable with tax makes payment of tax and interest under sub-section (8) of section 73 or under clause (ii) of sub-section (8) of section 74A, as the case may be, or tax, interest and penalty under sub-section (8) of section 74 or under clause (ii) of sub-section (9) of section 74A, as the case may be, within the period specified therein, or where the person concerned makes payment of the amount referred to in sub-section (1) of section 129 within seven days of the notice issued under sub-section (3) of that Section but before the issuance of order under the said sub-section (3), he shall intimate the proper officer of such payment in FORM GST DRC-03 and the proper officer shall issue an intimation in FORM GST DRC-05 concluding the proceedings in respect of the said notice.”	01.11.2024	Effect of introduction of Section 74A provided in the Rule
164	New Rule has been inserted for procedure and conditions for closure of proceedings under section 128A in respect of demands issued under Section 73.	1.11.2024	New Rule prescribing procedure and conditions for closure of proceedings under section 128A

• The Notification also substituted and inserted below Forms -

Form  No.	Form Description	Substituted / inserted	Effective Date
Form GST REG – 20	Order for Dropping the Proceedings for Cancellation of Registration	Substituted	08.10.2024
Form GST REG – 31	Suspension due to violation of Rule 10A	Substituted	08.10.2024
Form GST SPL – 01	Filing application of waiver of interest or penalty or both under section 128A in respect of a notice or a statement mentioned in clause (a) of sub-section (1) of the said section.	Inserted	01.11.2024
Form GST SPL – 02	Filing application of waiver of interest or penalty or both under section 128A in respect of an order mentioned in clause (b) or clause (c) of sub-section (1) of the said section.	Inserted	01.11.2024
Form GST SPL – 03	Providing notice in response to an application filed under Section 128A.	Inserted	01.11.2024
Form GST SPL – 04	Reply to notice issued under Rule 164(8).	Inserted	01.11.2024
Form GST SPL – 05	Issuance of order for conclusion of proceedings as per Section 128A where proper officer is satisfied that the applicant is eligible for waiver of interest and penalty.	Inserted	01.11.2024
Form GST SPL – 06	Issuance of order for conclusion of proceedings as per Section 128A where an appeal has been filed against the order in Form GST SPL 07.	Inserted	01.11.2024
Form GST SPL 07	Issuance of Order for Rejection of Application submitted under section 128A.	Inserted	01.11.2024
Form GST SPL 08	Issuance of undertaking submitted under Rule 164(15)(b)(ii).	Inserted	01.11.2024

(Source: Notification No. 20/2024-Central Tax dated 08.10.2024)

Due date for tax payment under Section 128A

• The Central Government vide Notification No. 21/2024-CT dated 08.10.2024 notifies the respective date by which payment for the tax, as per the notice, statement, or order, must be made to qualify for a waiver of interest and penalties under Section 128A of the CGST Act, 2017.
• If a notice was initially issued under Section 74 but later found unsustainable under that section, benefit under Section 128A is available if payment is made within 6 months of order date for re-determining tax under Section 73.
• Following dates have been provided:

•  Registered persons to whom a notice or statement or order, has been issued under section 128A: 31.03.2025
• Registered persons to whom a notice has been issued under  section 74(1), in respect of the period referred to in section 128A , and an order is passed or required to be passed by the proper officer in pursuance of the direction of the Appellate Authority, or Appellate Tribunal, or a court, in accordance with the provisions of section 75(2), for determination of the tax payable by such person, deeming as if the notice were issued under section 73(1) : Date ending on completion of six months from the date of issuance of the order by the proper officer re determining tax under section 73 of the CGST Act, 2017.

• This shall be applicable from 01.11.2024.

(Source: Notification No. 21/2024-Central Tax dated 08.10.2024)

Special procedure for rectification of orders denying ITC issued under Section 73, 74, 107, 108

CBIC has notified the special procedure for rectification of order, to be followed by the class of registered persons, against whom any order u/s 73, 74, 107 or 108 had been issued confirming demand for wrong availment of ITC, on account of contravention of provisions of Section 16(4) of CGST Act, 2017, but where such ITC is now available as per newly inserted Section 16(5) or 16(6), and where appeal against the said order has not been filed, namely:

• An application to be filed electronically on the common portal, within a period of six months from the date of issuance of this notification, for rectification of an order issued u/s  73, 74, 107 or 108 of CGST Act, 2017.

1. Along with the said application information needs to be provided and uploaded in required proforma in Annexure A.
2. The Proper Officer for carrying out such rectification shall be the authority who had issued such order, and shall take a decision on the said application and issue the rectified order, as far as possible, within a period of three months from the date of the said application and upload a summary of the rectified order electronically –

(i)   in FORM GST DRC-08, in cases where rectification of an order issued u/s 73 or 74 is made; and

(ii) in FORM GST APL-04, in cases where rectification of an order issued u/s 107 or 108 is made.

3. Where such rectification adversely affects the said person, the principles of natural justice shall be followed by the authority carrying out such rectification.

• This shall be effective from 08.10.2024. 

[Source: Notification No. 22/2024-CT dated 08.10.2024]

Waiver of late fees for GSTR-7

• CBIC has issued a Notification to supersede Notification No.22/2021-Central Tax dated 01.06.2021.
• It aims to rationalize late fee for delay in filing of return in FORM GSTR-7, with full waiver for Nil GSTR-7 returns.
• This shall be applicable w.e.f. 01.11.2024.

[Source: Notification No. 23/2024-CT dated 08.10.2024]

Registration mandatory for metal scrap dealers

• Exemption is granted to persons who are only engaged in making supplies of taxable goods or services or both, the total tax on which is liable to be paid on reverse charge basis under section 9(3) of CGST Act, 2017.
• This exemption shall not be available to metal scrap dealers and they shall have to obtain GST registration on crossing threshold limit.
• In other goods, registration shall be mandatory for metal scrap dealers, once threshold is breached.
• This shall be applicable from 10.10.2024.

[Source: Notification No. 24/2024-CT dated 08.10.2024]

2% TDS on Metal Scrap

• Any registered person receiving supplies of metal scrap shall deduct TDS of 2% on B2B transactions under section 51 of the CGST Act, 2017.
• TDS shall not be applicable to transaction other than on B2B basis.
• This shall be applicable from 10.10.2024.

[Source: Notification No. 25/2024-CT dated 08.10.2024]

Insertion of certain goods and services in Notification No. 1/2017-CT (Rate)

CBIC has added / substituted certain Goods and Services in Notification No. 01/2017-CT (Rate) dated 28.06.2017 to be taxable as per below –

1. Additions to the 2.5% CGST Rate (Schedule I): three new cancer drugs have been added-

“(233) Trastuzumab Deruxtecan

(234) Osimertinib

(235) Durvalumab”;

2. Additions to the 6% CGST Rate (Schedule II): a new entry 32C has been added to include “Extruded or expanded products, savoury or salted (other than un-fried or un-cooked snack pellets, by whatever name called, manufactured through process of extrusion)”.
3. Substitution in the 9% CGST Rate (Schedule III): -

1. In S. No. 16, in column (3), the words “un-fried or un-cooked snack pellets, by whatever name called, manufactured through process of extrusion”, has been substituted by the words “un-fried or un-cooked snack pellets, by whatever name called, manufactured through process of extrusion, extruded or expanded products, savoury or salted”.
2. S. No. 435A has been substituted to include seats in motor vehicles below–

Seats (other than those of heading 9402), whether or not convertible into beds and parts thereof other than seats of a kind used in aircraft or seats of a kind used for motor vehicles”.

4.  Additions to the 14% CGST Rate (Schedule IV): Entry No. 210A has been added to include seats of a kind used for motor vehicles.

The notification shall be applicable from 10.10.2024.

[Source: Notification No. 05/2024-CT (Rate) dated 08.10.2024]

Reverse Charge applicable on metal scrap

• CBIC has amended Notification No. 04/2017-CT (Rate) dated 28.06.2017 to notify that reverse charge on supply metal scrap by unregistered person to a registered person under section 9(3) of CGST Act, 2017.
• The following new entry has been inserted after S.No. 7:

S.No.	Tariff item, sub-heading, heading or Chapter	Description of supply of Goods	Supplier of Goods	Recipient of Supply
“8.	72, 73, 74, 75, 76, 77, 78, 79, 80 or 81	Metal scrap	Any unregistered person	Any registered person”.

• This shall be applicable from 10.10.2024.

[Source: Notification No. 06/2024-CT (Rate) dated 08.10.2024]

Transportation of passengers by air, in a helicopter on seat share basis chargeable at 2.5% CGST

• CBIC has amended Notification No. 11/2017- CT (Rate) dated 28.06.2017 to insert a new entry at Serial No. 8 to add item No. (ivb) to include “Transportation of passengers, with or without accompanied baggage, by air, in a helicopter on seat share basis” to be taxable at 2.5% CGST on the condition that credit of input tax charged on goods used in supplying the service shall not be taken.
• Also the Notification has inserted the words “(iva)” and “(ivb)” in item No. (vii) to give effect for this change in the said entry.
• This shall be effective from 10.10.2024.

[Source: Notification No. 07/2024-CT (Rate) dated 08.10.2024]

New Exempted Services

CBIC has amended Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017 to provide the following exemptions:

S.No.	Entry No.	Description of Services
	“25A	Supply of services by way of providing metering equipment on rent, testing for meters/transformers/capacitors etc., releasing electricity connection, shifting of meters/service lines, issuing duplicate bills etc., which are incidental or ancillary to the supply of transmission and distribution of electricity provided by electricity transmission and distribution utilities to their consumers.
	44A	Research and development services against consideration received in the form of grants supplied by – (a) a Government Entity; or (b) a research association, university, college or other institution, notified under clauses (ii) or (iii) of sub-section (1) of section 35 of the Income Tax Act, 1961.
	66A	Services of affiliation provided by a Central or State Educational Board or Council or any other similar body, by whatever name called, to a school established, owned or controlled by the Central Government, State Government, Union Territory, local authority, Governmental authority or Government entity.
	69	Any services provided by – (a) the National Skill Development Corporation set up by the Government of India; (b) the National Council for Vocational Education and Training; (c) an Awarding Body recognized by the National Council for Vocational Education and Training; (d) an Assessment Agency recognized by the National Council for Vocational Education and Training; (e) a Training Body accredited with an Awarding Body that is recognized by the National Council for Vocational Education and Training, in relation to- (i) the National Skill Development Programme or any other scheme implemented by the National Skill Development Corporation; or (ii) a vocational skill development course under the National Skill Certification and Monetary Reward Scheme; or (iii) any National Skill Qualification Framework aligned qualification or skill in respect of which the National Council for Vocational Education and Training has approved a qualification package.

The shall be applicable from 10.10.2024.

(Source: Notification No. 08/2024-Central Tax (Rate) dated 08.10.2024)

Reverse Charge Mechanism (RCM) on renting of any property

• CBIC has amended Notification No. 13/2017-CT (Rate) dated 28.06.2017 to notify levy of GST under Reverse Charge Mechanism (RCM) on renting of any property by any unregistered person to any registered person.
• The following entry after serial number 5AA has been inserted:

S. No.	Category of Supply of Services	Supplier of service	Recipient of Service
“5AB	Service by way of renting of any property other than residential dwelling.	Any unregistered person	Any registered person.”

• Thus, Reverse Charge Mechanism shall not apply to such renting which relate to residential dwelling.
• This shall be applicable from 10.10.2024.

(Source: Notification No. 09/2024-Central Tax (Rate) dated 08.10.2024)

Supreme Court on ITC on Construction related activities

• Commercial building constructed for supplying services such on renting / leasing can be treated as plant and input tax credit under GST will be allowable.
• Shopping mall is a plant.
• If a property qualifies as a plant, then ITC on goods or services used in its construction can be taken.
• Since plant has not been defined, its ordinary meaning in commercial terms has to be taken into account.
• The functionality test must be applied to assess whether the building is a plant for section 17(5)(d)of CGST Act, 2017.
• Apex Court remanded the matter back to Orissa High Court for factual determination of whether the shopping mall constructed could be classified as plant u/s 17(5)(d) of CGST Act, 2017.
• This may ease the financial burden / cost of rent on lessees / tenants occupying commercial spaces.

[Source: CHIEF COMMISSIONER OF CENTRAL GOODS AND SERVICE TAX & ORS. VERSUS M/S SAFARI RETREATS PRIVATE LTD. & ORS. - 2024 (10) TMI 286 - SUPREME COURT ]

Systemic improvement with respect to mapping / de-mapping of the officers

• MoF (GST Policy Wing) had issued instructions to check refund related fraud relating to mapping / de-mapping of officers on GSTN portal.
• Presently, a GST officer, mapped in the GSTN portal, was not de-mapped with immediate effect after his relieving from the charge, which resulted into fraudulent sanction of refund by the officer.
• In this regard, certain systemic improvement has been suggested by DGoV (Hqrs), inter alia, recommending that officers should be immediately de-mapped from the concerned field formation, on the GSTN portal, upon execution of the GFR-33. DGoV further suggested that the same may be monitored by supervisory officers, preferably of the rank of Joint Commissioner / Additional Commissioner, and a compliance report in this regard may be sent to the jurisdictional Commissioner / Principal Commissioner or equivalent within a specified time period.
• It is also requested that clear responsibility and accountability of the concerned jurisdictional officers, responsible for mapping / un-mapping of the officers on the GSTN portal, may be ensured regarding the same.
• Accordingly, all Principal Commissioners/ Commissioners or equivalent, shall ensure strict compliance of the directions given by the Directorate General of Vigilance (DGoV).

(Source: MoF Instruction No. 04/2024-GST dated 04.10.2024)

Advisory on Proper Entry of RR No./Parcel Way Bill (PWB) Numbers in EWB system Post EWB-PMS

• The GSTN has issued an update dated 04.10.2024 advising that Parcel Management System (PMS) of Indian Railways has now been integrated with the E-Way Bill (EWB) system via Application Programming Interfaces (APIs).
• This integration will facilitate the seamless transfer of RR No./Parcel Way Bill (PWB) data from Railways to e-way bill portal , ensuring better traceability and compliance. It is also important that taxpayers follow the correct process for entering Parcel Way Bill numbers into the EWB system.
• Following guidelines are also issued on:

1. Applicability of RR No./PWB Entry in the EWB System
2. Updating Part-B of EWB for Rail Transportation
3. Format for Entering the RR No./PWB Number
4. RR Number for FOIS or Leased Wagons
5. EWB and RR No./PWB Number Validation
6. Importance of Accurate Entry
7. Assistance and Clarifications

(Source: GSTN Advisory dated 04.10.2024)

GST on online food supply charges

• Customers buying food from an online platform (like Zomato) will normally pay GST @ 5% on food, 5% on packing charges, 18% on platform fee and 18% on delivery charges.
• However, there is no levy of GST on delivery charges where food supply is provided free without delivery charges (e.g., for gold card members where Zomato does not levy delivery charges).

(Source: CBIC Tweet dated 06.10.2024)