48th Gst Council Meeting

(1) Decriminalisation under GST:

The Council has decided to decriminalise the following three offences under the GST law –

• The tax threshold for launching prosecution under GST or taking criminal action is increased from Rs.1 crore to Rs.2 crore, except for fake invoices. In other words, offences pertaining to the issuance of invoices without the sale of goods or services or both or dealing with fake invoices continue to be prosecuted if the tax amount is more than Rs.1 crore.
• Reduction in the compounding amount from the current tax range of 50%-150% to the range of 25%-100%
• Certain offences under Section 132(1) clauses (g), (j) and (k) of the CGST Act, such as obstruction or restricting any officer from discharging their duties, intentional tempering of material evidence and failure to provide the information.

(2) Unregistered persons to get new GST refund rules:

Earlier, there was no defined process for refund claims for the buyers not registered under GST upon cancellation of the contract/ agreement for the sale of services such as flat/house construction and long-term insurance policy and upon the expiry of the time limit to issue credit note by the supplier.

The GST Council decided to amend the CGST Rules and directed CBIC to issue a Circular for the procedure to file a refund application by such unregistered buyers.

(3) Facilitate e-commerce for micro-enterprises from 1st October 2023:

From 1st October 2023, GST-unregistered suppliers, dealers and composition taxable persons can sell goods through e-commerce operators within the state, subject to some conditions.

CBIC and GSTN will make the necessary amendments to the Rules via notifications, an amendment to the Act and get the GST portal ready for the new functionality within the defined timeline.

(4) Clarifying the date of applicability for new entries in Schedule III under GST:

New entries were added in Schedule III (Items not covered under GST) from 1st February 2019, such as para 7 (sale from one non-taxable territory to another, such as high sea sales), para 8(a) (sale of warehoused goods before clearance for home consumption) and para 8(b) (Sale of goods by the consignee to any other person where goods are dispatched from the foreign port but before clearance for home consumption).

Confusion arose about their taxability from 1st July 2017 up to 31st January 2019, so the GST Council recommended giving effect to these additions from the inception of GST. However, no refund of tax already paid shall be granted.

(5) Reversal of Input Tax Credit (ITC) for non-payment of invoice within 180 days:

CGST Rule 37(1) will be amended retrospectively from 1st October 2022 for ITC reversal to provide for reversal of input tax credit as per the second proviso to Section 16 of CGST Act, only to the extent of the invoice amount unpaid to the supplier versus the value of the supply, along with tax payable.

(6) New CGST Rule 37A for ITC reversal where the supplier fails to deposit tax:

The GST Council decided to insert Rule 37A in CGST Rules that will define steps to reverse ITC claimed on taxes undeposited by the supplier within a specified date. Further, the process of re-availing such ITC where the supplier pays it subsequently will be provided.

It allows easy compliance with the condition for claiming an input tax credit as per Section 16(2)(c) of the CGST Act.

(7) Amendments for timely and easier GST appeal processing:

Changes in CGST Rules 108(3) and 109: More clarity for submission of a certified copy of the order against which the appeal is filed and the final acknowledgement issued by the appellate authority.

Change in CGST Rule 109C and insertion of new form GST APL-01/03 W: Gives facility for withdrawing an appeal application up to a certain defined stage, avoiding litigations at the level of appellate authorities.

(8) Insurance – No Claim Bonus (NCB) offered by insurance companies, especially in motor vehicle insurance, is allowed as a deduction from the taxable premium amount for valuation purposes.

(9) Fresh GST Circulars will be issued on the following issues:

• Treatment of pending GST dues from bankrupt businesses where proceedings are filed under the Insolvency and Bankruptcy Code, 2016 (IBC). Rule 161 of CGST Rules and form DRC-25 will be amended accordingly.
• Place of supply of mail/courier services for transportation of goods to places outside India under the proviso to Section 12(8) of the IGST Act and ITC availability to the recipient. The removal of that proviso from the law is further recommended by the Council.
• Procedure for verification of ITC differences between GSTR-3B and GSTR-2A for FY 2017-18 and 2018-19. It would reduce the need for litigations and give much-needed clarity to taxpayers and officers.
• Manner of demand re-determination as per Section 75(2) of the CGST Act. Suppose the tax officer claims there is a misstatement, suppression of returns, or fraud involving tax evasion but has not proved it. The taxes shall be recomputed under Section 73 and not as per Section 74.
• Applicability of e-invoicing for a business entity. For instance, suppose the turnover during FY 2022-23 exceeds the threshold limit of Rs.10 crore, whether e-invoicing applies from the next financial year, i.e., 1st April 2023 or from the current year.

(10) Grant of GST registration to TDS deductor and TCS collectors:

CGST Rule 12(3) will be amended to introduce a facility to the GST-registered TDS deductor and TCS collectors for applying for the cancellation of GST registration.

Note: GST rate change notifications and circulars are issued by the CBIC on 26th and 27th December 2022. These changes will come into effect from the date of such notification, i.e., 1st January 2023 or the date of publishing the notification in the Official Gazette, i.e., 27th December 2022.