Significant recommendations by GST Council on 47th Meet for quick digest

In our earlier blog on 47th GST Council's recommendations, we have reproduced their press report for full coverage as they said it. Every recommendation is significant in the eyes of respective goods or services providers. Over this article, lets look at those recommendations that has an impact across the suppliers, and also some welcoming changes. 

1. Recommendations by Group of Ministers ( GoM) on a rate rationalization to remove the Inverted duty structure on certain goods and services, results in elimination of administrative efforts by the department, and taxpayers can save time. 
2. Change in formula for calculation of refund under rule 89(5) to take into account utilization of ITC on account of inputs and input services for payment of output tax on inverted rated supplies in the same ratio in which ITC has been availed on inputs and input services during the said tax period. This would help those taxpayers who are availing ITC on input services also.
3. Works contract services taxed at 5 to 18% under various scenarios are now standardised at 18%. 
4. Similarly for Job works in leather industry and for clay bricks will be taxed at 12% instead of 5%
5. GST was exempted on specified food items, grains etc when not branded to exclude prepackaged and pre-labelled retail pack in terms of Legal Metrology Act. This will push up the retail price of these goods.
6. E-waste will be taxed at 18% instead of 5%
7. Hotel accommodation priced upto Rs. 1000/day shall be taxed at 12%. Would this extend to other accommodation faciliites such as students hostel? We need to wait till its notified for more clairity. 
8. Room rent (excluding ICU) exceeding Rs 5000 per day per patient charged by a hospital shall be taxed to the extent of amount charged for the room at 5% without ITC. Costly hospitals will be more costlier with this.
9. Tax exemption on training or coaching in recreational activities relating to arts or culture, or sports is being restricted to such services when supplied by an individual
10. The Council directed that the Group of Ministers on Casino, Race Course and Online Gaming re-examine the issues in its terms of reference based on further inputs from States and submit its report within a short duration
11. Application fee charged for entrance or for issuance of eligibility certificate for admission or issuance of migration certificate by universities is exempt from GST. There is growing interventions by Intelligence Team demanding tax on these services provided by universities inspite of judgements in case of Madurai Kamarajar , Dr MGR and Periyar Universities. 
12. Services in form of Assisted Reproductive Technology (ART)/ In vitro fertilization (IVF) are covered under the definition of health care services for the purpose of exemption under GST
13. Development charges passed by promoters often questioned whether its a composite supply ( where land being principal supply) or not. The council has recommended that Sale of land after leveling, laying down of drainage lines etc. is sale of land and does not attract GST. 
14. New additions to RCM list under sec 9(3)- 
1. Renting of motor vehicles for transport of passengers to a body corporate for a period (time) is taxable in the hands of body corporate under RCM
2. All taxable service of Department of Posts would be subject to forward charge. Hitherto certain taxable services of Department of post were taxed on reverse charge basis
15. Goods transport agency (GTA) is being given option to pay GST at 5% or 12% under forward charge; option to be exercised at the beginning of Financial Year. RCM option to continue.
16. Waiver of requirement of mandatory registration under section 24(ix) of CGST Act for person supplying goods through ECOs, subject to certain conditions, such as-
1. the aggregate turnover on all India basis does not exceed the turnover specified under sub-section (1) of section 22 of the CGST Act and notifications issued thereunder.
2. the person is not making any inter-State taxable supply
17. Composition taxpayers would be allowed to make intra-State supply through e-commerce operators subject to certain conditions. The details of the scheme will be worked out by the Law Committee of the Council. The scheme would be tentatively implemented with effect from 01.01.2023, subject to preparedness on the portal as well as by ECOs.
18. In-spite of Finance Bill 2022 was passed early this year, its yet to be notified under GST. Especially retrospective amendment in section 50(3) of CGST Act, with effect from 01.07.2017, to provide that interest will be payable on the wrongly availed ITC only when the same is utilized, and amendment in sub-section (10) of section 49 of CGST Act to provide for transfer of balance in electronic cash ledger of a registered person to electronic cash ledger of CGST and IGST of a distinct person. Litigations in this space were closed in departments favour owing to this gap.
19. Present exemption of IGST on import of goods under AA/EPCG/EOU scheme to be continued and E-wallet scheme not to be pursued further
20. Explanation 1 after rule 43 of CGST Rules to be amended to provide that there is no requirement of reversal of input tax credit for exempted supply of Duty Credit Scrips by the exporters. Not sure why rule 42 is missing a mention here though
21. UPI & IMPS to be provided as an additional mode for payment of Goods and Services Tax to taxpayers under Rule 87(3) of CGST Rules
22. Amendment in CGST Rules to provide for refund of unutilized Input Tax Credit on account of Export of Electricity. This would facilitate the exporters of electricity in claiming refund of utilized ITC on zero rated supplies. I wonder this is already covered under sec 16(2) of IGST Act 2017, why specifically need a mention for electricity supplies alone. 
23. Supplies from Duty Free Shops (DFS) at international terminal to outgoing international passengers to be treated as exports by DFS and consequential refund benefit to be available to them on such supplies. Rule 95A of the CGST Rules, Circular No. 106/25/2019-GST dated 29.06.2019 and related notifications to be rescinded accordingly. 
24. Provision for automatic revocation of suspension of registration in cases where suspension of registration was done by the system under Rule 21A(2A) of CGST Rules, for non-compliance in terms of clause (b) or clause (c) of sub-section (2) of section 29[continuous non-filing of specified number of returns], once all the pending returns are filed on the portal by the taxpayer. (Amendment in rule 21A)
25. Proposal for comprehensive changes in FORM GSTR-3B to be placed in public domain for seeking inputs/suggestions of the stakeholders. We may expect revised return concept with this proposal.
26. Time period from 01.03.2020 to 28.02.2022 to be excluded from calculation of the limitation period for filing refund claim by an applicant under section 54 and 55 of CGST Act, as well as for issuance of demand/ order (by proper officer) in respect of erroneous refunds under section 73 of CGST Act. Further, limitation under section 73 for FY 2017-18 for issuance of order in respect of other demands linked with due date of annual return, to be extended till 30th September, 2023
27. The Council has decided to constitute a Group of Ministers to address various concerns raised by the States in relation to constitution of GST Appellate Tribunal and make recommendations for appropriate amendments in CGST Act
28. The GoM on IT Reforms, inter alia, recommended that the GSTN should put in place the AI/ML based mechanism to verify the antecedents of the registration applicants and an improved risk-based monitoring of their behavior post registration so that non-compliant tax payers could be identified in their infancy and appropriate action be taken so as to minimize risk to exchequer

After a gap of 6 months, GST Council's meet gains significance as was in the past. Numerous changes in the law from time to time makes the GST practice even more challenging, fasten your seat belt!!

- LDR

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The opinions, suggestions or thoughts expressed are that of the author of this article, please exercise adequate care in applying to your own scenario with appropriate technical advise as deem necessary.