The 52nd GST (Goods and Services Tax) Council Meeting Highlights

The 52^nd GST Council meeting was held on 07^th October 2023 in New Delhi, wherein the council made the key recommendations such as eligibility and age of President and Members of GST Appellate Tribunal, changes in GST rates on such goods, exemptions in certain services, amnesty schemes for filing the appeals, clarifications in respect of taxability of personal guarantee offered by the directors. A summary in respect of the recommendations is delivered below:

1.The Council recommended a change in GST rates on the below-mentioned goods:

2. It is to be clarified that Imitation Zari thread or yarn made up of metallized polyester film/ plastic film would attract 5% GST. However, no refund would be allowed on account of inversion.

3. It is recommended to provide a conditional IGST exemption to the Foreign Flag Foreign going vessels when they convert to coastal run, subject to its reconversion to foreign going vessel in six months.

3. It is recommended to keep Extra Neutral Alcohol (ENA) used for the manufacture of alcoholic liquor for human consumption outside GST. Further, a Separate HS Code of 8 Digit has been created to cover the rectified spirit for industrial use. A notification is to be issued to create an entry for ENA for industrial purposes attracting 18% GST.

4. It is recommended to retain the exemptions provided on the pure and composite services provided to the Central/State/UT governments and local authorities in relation to any function entrusted to Panchayat/ Municipality under Article 243G and 243W of the Constitution of India. Further, it is also recommended to exempt the services of water supply, public health, sanitation conservancy, solid waste management and slum improvement and upgradation supplied to Governmental Authorities.

5. It is recommended to clarify that the Job Work services for processing of barley into malt attracts GST @ 5% as applicable to "job work in relation to food and food products”.

6. It is recommended to provide an option to the bus operator organised as companies may be excluded from the purview of Section 9(5) of the CGST Act, 2017.

7. It is to be clarified that District Mineral Foundations Trusts (DMFT) set up by the state Government are Government Authorities thus, eligible for the exemptions as provided to other Governmental Authorities.

8. Supply of all Goods and Services by Indian Railways shall be taxed under Forward Charge Mechanism.

10. It is recommended to provide an amnesty scheme to the taxpayers for filing the appeal under Section 107 of CGST Act, 2017 up to 31^st January 2024, against the orders of demand issued under Section 73 or 74 of CGST Act, 2017 passed on or before 31^st March 2023, including the cases where the appeal was rejected on the ground that the appeal is not filed within the Stipulate Time.

11.It is recommended to issue a circular to clarify that where there is no consideration paid by the company to the director directly or indirectly, for providing a personal guarantee to the bank/ financial institutes, the open market value shall be treated as Zero;

12. It is recommended to insert sub-rule (2) in Rule 28 to provide, the taxable value of the Corporate Guarantee provided between related parties as one percent of the amount of guarantee offered or actual consideration, whichever is higher. Further, it is to be clarified that whether full ITC is available to the recipient or not, the value of supply shall be calculated as per proposed Rule 28(2) of CGST Rules 2017.

13. It is recommended to amend FORM DRC-22 and the related Rule that FORM DRC-22, the order of provisional attachment shall not be valid after the expiry of one year from the date of the said order.

14. The council has recommended to clarify the place of supply in the following cases:

• Supply of service of transportation of goods, including by mail or courier, in cases where the location of the supplier or the location of the recipient of services is outside India;
• Supply of advertising services;
• Supply of the co-location services

15. It is recommended to clarify the admissibility of export remittances received in the Special INR Vostro account, as permitted by RBI, for the purpose of consideration of supply of services to qualify as export of services in terms of the provisions of sub-clause (iv) of clause (6) of section 2 of the IGST Act, 2017.

16. It is recommended to amend Notification No. 1/2023 Integrated Tax dated 31.07.2023 w.e.f., 01.10.2023 to allow the suppliers to a SEZ developer or SEZ unit for authorised operations to make supply of goods or services except the commodities like Pan Masala, Tobacco etc., mentioned in the said Notification to the SEZ developer or the SEZ unit for authorised operations on payment of IGST and claim the refund of the taxes so paid.

17. It is recommended the amendments of Section 110 of the CGST Act, 2017, provide that:

• an advocate for ten years with substantial experience in litigation under indirect tax laws in the Appellate Tribunal, Central Excise and Service Tax Tribunal, State VAT Tribunals by whatever name called, High Court or Supreme Court to be eligible for the appointment as judicial member;
• the minimum age for eligibility for appointment as President and Member to be 50 years;
• President and Members shall have tenure up to a maximum age of 70 years and 67 years respectively.

18. It is recommended to amend the provisions of Section 2(61) and Section 20 of the CGST Act, 2017 in respect to ISD as recommended by the GST Council in its 50^th Meeting.