RECENT DEVELOPMENTS IN GST

[Dr. Sanjiv Agarwal]

The International Monetary Fund (IMF) has retained India’s economic growth rate at 7% for the current fiscal 2024-25. For 2026, IMF’s forecast is of 6.5%. On the other had RBI’s forecast for 2025 is 7.2%. For 2025, growth projections for China is 4.5%, US is 2.2% and World is 3.2%.

In a significant judgment by majority (8:1), Supreme Court’s 9 judge bench has upheld the legislative power of states to regulate and tax industrial liquor. It held that states have regulatory powers over production, manufacture, supply and pricing of industrial alcohol. It over - turned a 7- judge decision which held that state’s powers were limited to taxing alcohol for human consumption only. Industrial alcohol comes within the meaning of intoxicating liquor under Entry 8 of List II (State list) of Constitution and that Parliament does not have legislative competence to enact a law taking control of the industry of in intoxicating liquor falling under Entry 8 of List II in exercise of powers under Article 246 read with Entry 52 of List I.

The scope goes beyond alcoholic beverages and includes alcohol not meant for human consumption. With this, a dispute for long gets settled. This will also impact taxing industrial liquor under GST and now states will be able to levy state excise duty and VAT on all types of alcoholic liquor and beverages.

CBIC issued a Corrigendum to Notification No. 09/2024- Central Tax (Rate) dated 08.10.2024 stating that the reference to ‘any property’ in the said notification is to ‘immovable property’ and not all or any properties. Also, a corrigendum has been issued to Circular No. 237 dated 15.10.2024 clarifying that restriction on refund shall not be applicable to amounts of pre-deposit made against appeals under section 107 and 112 of CGST Act, 2017. Both these Corrigendum’s make sense as these were being interpreted differently by various stakeholders.

In October, 2024, GST collection stands at second highest ever at Rs. 1.87 lakh crore (Rs. 1,87,346 crore), showing a growth of 8.9% on YoY basis. Total GST collection in 2024 so far is Rs. 12.74 lakh crore (up by 9.4%) over 2023.

Reverse Charge Mechanism (RCM) on renting of any immovable property

• The CBIC has issued a Corrigendum clarifying that "any property" should be read as "any immovable property", for renting of commercial property by an unregistered person to a registered person under Reverse Charge Mechanism to prevent revenue leakage.
• Now, the entry shall be read as under:

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

(Source: Corrigendum dated 22.10.24 to Notification No. 09/2024-Central Tax (Rate) dated 08.10.2024)

Input Tax Credit: Insertion of new sub-section (5) and (6) in Section 16 of CGST Act, 2017 (Corrigendum to Circular 237 dated 15.10.2024)

• According to amendment made by Finance (No.2) Act, 2024, no refund of tax already paid or input tax credit already reversed would be available, where such tax has been paid or input tax credit has been reversed on account of contravention of provisions of section 16(4) of the CGST Act, and where such input tax credit is now available as per the provisions of [Section 16(5),(6)] of the CGST Act.
• Such restriction on refund shall not apply to refund amount of pre-deposit against any appeal u/s 107(6) or 112 (8) of CGST Act, 2024.

(Source: Circular No. 237/31/2024-GST dated 15.10.2024 

read with corrigendum dated 25.10.2024)

Validation of bank account details while adding bank account as Non Core amendment

• GSTN has implemented a validation process for cases where a taxpayer attempts a non-core amendment to update bank account details.
• Taxpayers are requested to follow the procedure outlined in the link provided below while adding bank account details on the portal.

(Source: GSTN Advisory dated 22.10.2024)

Advisory on GSTR REG 07 for Metal Scrap

• GSTN has to facilitate the registration compliance for buyers of metal scrap through form GST REG-07.
• This update follows the new GST provisions for metal scrap buyers as outlined in the advisory issued on October 13.
• Taxpayers in this category are required to select "Others" in Part B of Table 2 under the "Constitution of Business" section. A text box will appear where the taxpayer must enter “Metal Scrap Dealers.”
• This entry is mandatory for those selecting the "Others" option. Once this is completed, the remaining details in form GST REG-07 should be filled and submitted on the common portal to meet the registration requirements as per Notification No. 25/2024 - Central Tax, dated October 9, 2024.

 (Source: GSTN Advisory dated 22.10.2024)

Barring of GST Return on expiry of three years

GSTN has issued an advisory on barring of GST Return on expiry of three years. Accordingly,

• As per the Finance Act, 2023 (8 of 2023), implemented w.e.f 01-10-2023 vide Notification No. 28/2023 – Central Tax dated 31th July, 2023, the taxpayers are not be allowed file their GST returns after the expiry of a period of three years from the due date of furnishing the said return under Section 37 (Outward Supply), Section 39 (payment of liability), Section 44 (Annual Return) and Section 52 (Tax Collected at Source).
• These Sections cover GSTR-1, GSTR 3B, GSTR-4, GSTR-5, GSTR-5A, GSTR-6, GSTR 7, GSTR 8 and GSTR 9.
• The changes will be implemented in the GST portal from early next year (2025). Hence, the taxpayers are advised to reconcile their records and file their GST Returns as soon as possible if not filed till now.

(Source: GSTN Advisory dated 29.10.2024)

GST Collection in October, 2024

• In October, 2024, GST collection stands at second highest ever at Rs. 1.87 lakh crore (Rs. 1,87,346 crore), showing a growth of 8.9% on YoY basis.
• Total GST collection in 2024 so far is Rs. 12.74 lakh crore (up by 9.4%) over 2023.
• The Central GST collection stood at Rs 33,821 crore, State GST at Rs 41,864 crore, Integrated IGST at Rs 99,111 crore and cess at Rs 12,550 crore during the month.
• After adjusting refunds, net GST collection grew 8 per cent at over Rs 1.68 lakh crore.
• Of total collection of Rs. 1.87 lakh crore, Rs. 45,096 crore is on account of import revenue. Total refunds are at Rs. 19,306 crore. Total net GST revenue is Rs. 1,68,041 crore.
• The main reason for higher collection is attributed to higher domestic sales and increased compliances.
• State wise growth of GST revenues in October, 2024 is higher in Chandigarh, Haryana, Bihar, Tripura, West Bengal, Meghalaya, Gujarat, Maharashtra, Kerala and Ladakh. It is negative in states like Arunachal Pradesh, Himachal Pradesh, Nagaland and Lakshadweep.

(Source: GSTN revenue report October, 2024 dated 01.11.2024)