Weeks after the first Amrit Kaal Budget, the GST Council met for the 49th time on February 18, 2023 in New Delhi. Whilst Budget 2023 proposed several legislative amendments in the GST laws, the industry was expecting clarity on GST Appellate Tribunal (‘GSTAT’ / ‘Tribunal’) and Online Gaming and demanding Amnesty Schemes for the past period.
Of course, the GST Council Meeting catered to the industry demands by serving a bunch of desired recipes. However, decision regarding the Tribunal and payment of pending Compensation Cess dues has to be regarded as cherry on top of the dish.
Clearance of pending GST Compensation Cess dues
The Goods and Services Tax (Compensation to States) Act, 2017 was enacted for compensating States with the loss of revenue due to introduction of GST. The accumulating pending balance of GST Compensation Cess was always a favourite question posed to Central Government. However, the 49th GST Council Meeting took a brave and bold step by clearing entire pending balance of GST Compensation Cess Rs. 16,982 Crores for June 2022 from its own resources. With this release, the Central Government has cleared the entire provisionally admissible compensation due to the States for five years.
Additionally, it has also been resolved that Central Government shall clear the final GST Compensation Cess Rs. 16,524 Crores to the States which have provided revenue figures as certified by Accountant General.
The clearance of pending Compensation Cess dues from Central Government is clearly a positive and welcome move for the GST in years to come as it shall give confidence to States to decide upon inclusion of petro-products in the ambit of GST. As is said, “we may come from different States, places but our hearts beat one i.e. INDIA” and thus with greater cooperation and coordination amongst Centre and States we shall progress towards the leading economy in the world.
GSTAT
Strong appeal mechanism in any statute is a sign of strong judiciary as it ensures delivery of justice to aggrieved parties. GST law stipulates a four-level appeal mechanism viz. Commissioner (Appeals), GSTAT, High Court and the Supreme Court. However, as a natural corollary, the GSTAT could not be constituted due to several complexities and diversities. To add to the dismay, the provisions relating to GSTAT were struck down by High Court of Madras in Revenue Bar Association v. Union of India
While the discussions on constitution of GSTAT was a subject matter of many GST Council Meetings, it was in the 47th GST Council Meeting held in June 2022 wherein a Committee of Group of Ministers (‘GoM’) was formed for this. The GoM submitted its report which was accepted by the GST Council and has thus paved the way for GSTAT. The defects in legislative drafting have been taken care of and such changes shall be made part of the Finance Act, 2023.
The constitution of GSTAT will pave the way for GST 2.0 as it will be a game changer for bringing clarity on many litigative issues. It will help in reducing the burden of Writ Courts as earlier taxpayers had to invoke Writ Jurisdiction under Article 226 of the Indian Constitution post negative order of Commissioner (Appeals). The Author also believe that States will have flexibility in setting of number of Tribunals and further Government should look for introducing mechanism for e-filing of such appeals.
Rate related changes
GST rates is one area which is always marred with amendments. The 49 th GST Council Meeting has recommended for changes in rates for certain goods like ‘Rab’, ‘Pencil Sharpeners’ etc. The Council has also extended GST exemption on conduct of examinations by NTA and has further widened the scope of reverse charge by including services rendered by Courts / Tribunals by way of renting of chambers etc.
Truly, one of the most significant recommendations herein is extension of compensation cess exemption when coal rejects are supplied to coal washeries. This exemption is a welcome move and shall definitely provide a huge relief to the coal industry. In this regard, Author wishes to highlight that the intention of 28th GST Council Meeting was to exempt the transaction of coal rejects from both legs, however, the exemption was extended to only one leg. Hence, this exemption must be given retrospective effect.
Trade facilitation changes
In an emphatic move, the 49th GST Council Meeting has recommended for deletion of provision providing for place of supply of transportation of goods wherein either supplier or recipient is located in India. This amendment shall now shift the place of supply to location of recipient instead of the earlier being destination of goods. Hence, taxpayers would be required to re-analyse their tax positions on such transactions.
There has been relaxation to adherence of time limits with respect to application for revocation of cancellation of GST registration, filing of return in case of best judgement assessment. Further, there has been a rationalisation of late fee for filing of Annual Returns from FY 2022-23.
It seems like this GST Council Meeting has heard the unheard by proposing amnesty schemes for filing of application for revocation of cancellation of registration and permitting filing of returns along with interest, late fee and thereby withdraw best judgement assessment. Such extension in time limits and amnesty schemes are likely to benefit the industry in huge and is therefore, a welcome clarification from the GST Council.
Conclusion
While few announcements hold significance, there has been no discussions on Online Gaming. It is hoped that GoM shall come out with its report to bring clarity on online gaming. The GST Council has ensured stemming the tide of enormous litigation at High Courts through introduction of GSTAT and has provided relief to taxpayers through amnesty schemes. It would be interesting to closely observe the Agenda of GST Council when it hits the Half Century of its meetings!!!
—The author, Abhishek A Rastogi, is the founder of Rastogi Chambers. The views expressed are strictly personal.
Read his previous articles here
(Edited by : C H Unnikrishnan)
First Published: Feb 19, 2023 11:02 PM IST
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