Key Highlights of the 48th Meeting of the GST Council

The 48th Meeting of the GST Council was held on 17th December, 2022 through Video
Conference, under the chairpersonship of the Union Finance & Corporate Affairs Minister Smt.
Nirmala Sitharaman.
Tax rates

The GST Council has, inter-alia, made following recommendations for changes in GST
rates:

Sr.No	Description (Goods)	From	To
1.	Husk of pulses including chilka and concentrates including chuni/churi, khanda	5%	Nil
	Ethyl alcohol supplied to refineries for blending with motor spirit (petrol)	18%	5%

It was also decided to include supply of Mentha arvensis under reverse charge mechanism
as has been done for Mentha Oil.
It was decided to clarify that:
• Rab (rab-salawat) is classifiable under CTH 1702 which attracts GST at the rate
of 18%.
• fryums manufactured using the process of extrusion is specifically covered under
CTH 19059030 and attract GST at the rate of 18%.
• The higher rate of compensation cess of 22% is applicable to motor vehicle
fulfilling all four conditions, namely, it is popularly known as SUV, has engine
capacity exceeding 1500 cc, length exceeding 4000 mm and a ground clearance of
170 mm or above
• goods falling in lower rate category of 5% under schedule I of notification No.
1/2017-CTR imported for petroleum operations will attract lower rate of 5% and
the rate of 12% shall be applicable only if the general rate is more than 12%

As a relief measure, the Council decided to regularise the intervening period starting from
the date of issuance of Circular (3.08.2022) in respect of GST on ‘husk of pulses including
chilka and concentrates including chuni/churi, khanda’ on “ as is basis” on account of
genuine doubts.
No GST is payable where the residential dwelling is rented to a registered person if it is
rented it in his/her personal capacity for use as his/her own residence and on his own
account and not on account of his business.

Incentive paid to banks by Central Government under the scheme for promotion of RuPay
Debit Cards and low value BHIM-UPI transactions are in the nature of subsidy and thus
not taxable
Measures for facilitation of trade

Decriminalization under GST: The Council has recommended to –
• raise the minimum threshold of tax amount for launching prosecution under GST
from Rs. One Crore to Rs. Two Crores, except for the offence of issuance of
invoices without supply of goods or services or both;
• reduce the compounding amount from the present range of 50% to 150% of tax
amount to the range of 25% to 100%;
• decriminalize certain offences specified under clause (g), (j) and (k) of sub-section
(1) of section 132 of CGST Act, 2017, viz.-
o obstruction or preventing any officer in discharge of his duties;
o deliberate tempering of material evidence;
o failure to supply the information.
Refund to unregistered persons: There is no procedure for claim of refund of tax borne
by the unregistered buyers in cases where the contract/ agreement for supply of services,
like construction of flat/house and long-term insurance policy, is cancelled and the time
period of issuance of credit note by the concerned supplier is over. The Council
recommended amendment in CGST Rules, 2017, along with issuance of a circular, to
prescribe the procedure for filing application of refund by the unregistered buyers in such
cases.
Facilitate e-commerce for micro enterprises: GST Council in its 47th meeting had
granted in-principle approval for allowing unregistered suppliers and composition
taxpayers to make intra-state supply of goods through E-Commerce Operators (ECOs),
subject to certain conditions. The Council approved the amendments in the GST Act and
GST Rules, along with issuance of relevant notifications, to enable the same. Further,
considering the time required for development of the requisite functionality on the portal
as well as for providing sufficient time for preparedness by the ECOs, Council has
recommended that the scheme may be implemented w.e.f. 01.10.2023.

Paras 7, 8(a) and 8(b) were inserted in Schedule III of CGST Act, 2017 with effect from
01.02.2019 to keep certain transactions/ activities, such as supplies of goods from a place
outside the taxable territory to another place outside the taxable territory, high sea sales
and supply of warehoused goods before their home clearance, outside the purview of GST.
In order to remove the doubts and ambiguities regarding taxability of such transactions/
activities during the period 01.07.2017 to 31.01.2019, the Council has recommended to
make the said paras effective from 01.07.2017. However, no refund of tax paid shall be
available in cases where any tax has already been paid in respect of such transactions/
activities during the period 01.07.2017 to 31.01.2019.x`

The Council has recommended to amend sub-rule (1) of rule 37 of CGST Rules, 2017
retrospectively with effect from 01.10.2022 to provide for reversal of input tax credit, in
terms of second proviso to section 16 of CGST Act, only proportionate to the amount not
paid to the supplier vis a vis the value of the supply, including tax payable.
The Council recommended to insert Rule 37A in CGST Rules, 2017 to prescribe the
mechanism for reversal of input tax credit by a registered person in the event of nonpayment of tax by the supplier by a specified date and mechanism for re-availment of such
credit, if the supplier pays tax subsequently. This would ease the process for complying
with the condition for availment of input tax credit under section 16(2)(c) of CGST
Act, 2017.
Sub-rule (3) of rule 108 and rule 109 of the CGST Rules, 2017 to be amended to provide
clarity on the requirement of submission of certified copy of the order appealed against
and the issuance of final acknowledgment by the appellate authority. This would facilitate
timely processing of appeals and ease the compliance burden for the appellants.
Rule 109C and FORM GST APL-01/03 W to be inserted in the CGST Rules, 2017 to
provide the facility for withdrawal of an application of appeal up to certain specified stage.
This would help in reducing litigations at the level of appellate authorities.
Circular to be issued to clarify that No Claim Bonus offered by the insurance companies
to the insured is an admissible deduction for valuation of insurance services.
Circular to be issued for clarifying the issue of treatment of statutory dues under GST law
in respect of the taxpayers for whom the proceedings have been finalised under Insolvency
and Bankruptcy Code, 2016. Rule 161 of CGST Rules, 2017 and FORM GST DRC-25
also to be amended for facilitating the same.
Sub-rule (3) of rule 12 of CGST Rules, 2017 to be amended to provide for facility to the
registered persons, who are required to collect tax at source under section 52 or deduct tax
at source under section 51 of CGST Act, 2017, for cancellation of their registration on
their request.
Circular to be issued for clarifying the issues pertaining to the place of supply of services
of transportation of goods in terms of the proviso to sub-section (8) of section 12 of the
IGST Act, 2017 and availability of input tax credit to the recipient of such supply. It has
also been recommended that proviso to sub-section (8) of section 12 of the IGST Act, 2017
may be omitted.
Issuance of the following circulars in order to remove ambiguity and legal disputes on
various issues, thus benefiting taxpayers at large:

a. Procedure for verification of input tax credit in cases involving difference in input tax
credit availed in FORM GSTR-3B vis a vis that available as per FORM GSTR-2A
during FY 2017-18 and 2018-19.
b. Clarifying the manner of re-determination of demand in terms of sub-section (2) of
section 75 of CGST Act, 2017.
c. Clarification in respect of applicability of e-invoicing with respect to an entity.

Measures for streamlining compliances in GST

Proposal to conduct a pilot in State of Gujarat for Biometric-based Aadhaar authentication
and risk-based physical verification of registration applicants. Amendment in rule 8 and
rule 9 of CGST Rules, 2017 to be made to facilitate the same. This will help in tackling
the menace of fake and fraudulent registrations.
PAN-linked mobile number and e-mail address (fetched from CBDT database) to be
captured and recorded in FORM GST REG-01 and OTP-based verification to be
conducted at the time of registration on such PAN-linked mobile number and email address
to restrict misuse of PAN of a person by unscrupulous elements without knowledge of the
said PAN-holder.
Section 37, 39, 44 and 52 of CGST Act, 2017 to be amended to restrict filing of returns/
statements to a maximum period of three years from the due date of filing of the relevant
return / statement.
FORM GSTR-1 to be amended to provide for reporting of details of supplies made through
ECOs, covered under section 52 and section 9(5) of CGST Act, 2017, by the supplier and
reporting by the ECO in respect of supplies made under section 9(5) of CGST Act, 2017.
Rule 88C and FORM GST DRC-01B to be inserted in CGST Rules, 2017 for intimation
to the taxpayer, by the common portal, about the difference between liability reported by
the taxpayer in FORM GSTR-1 and in FORM GSTR-3B for a tax period, where such
difference exceeds a specified amount and/ or percentage, for enabling the taxpayer to
either pay the differential liability or explain the difference. Further, clause (d) to be
inserted in sub-rule (6) of rule 59 of CGST Rules, 2017 to restrict furnishing of FORM
GSTR-1 for a subsequent tax period if the taxpayer has neither deposited the amount
specified in the intimation nor has furnished a reply explaining the reasons for the amount
remaining unpaid. This would facilitate taxpayers to pay/ explain the reason for the
difference in such liabilities reported by them, without intervention of the tax officers
Amendment in definition of “non-taxable online recipient” under section 2(16) of IGST
Act, 2017 and definition of “Online Information and Database Access or Retrieval
Services (OIDAR)” under section 2(17) of IGST Act, 2017 so as to reduce interpretation
issues and litigation on taxation of OIDAR Services.
Note: The recommendations of the GST Council have been presented in this release containing
major item of decisions in simple language for information of the stakeholders. The same
would be given effect through the relevant circulars/ notifications/ law amendments which alone shall have the force of law.