The 52nd GST Council meeting was held in Delhi on October 7, 2023 under the chairmanship of the Union Finance & Corporate Affairs Minister Smt. Nirmala Sitharaman. The GST Council has inter-alia made the following recommendations relating to changes in GST rates on Goods and Services and other measures for facilitation of trade. The key highlights of the meeting are as under:

1. Rate of Tax on Goods and Services 
2. Reverse charge mechanism
3. Exemption from GST
4. Amnesty Scheme
5. Streamlining compliances under GST
6. Removal of ambiguity and legal disputes on various GST issues
7. Miscellaneous

1. Rate of Tax on goods

A. Change in Rate of Tax of Goods

Sr. No.	Description	From	To
1.	Food preparation of millet flour in powder form, containing at least 70% millets by weight	18%	5%- – if sold pre-packaged and labelled Nil – if sold otherwise
2.	Molasses	28%	5%

B. Clarification on rates of goods:

Imitation zari thread or yarn: To clarify that imitation zari thread or yarn made out of metallised polyester film /plastic film, falling under HS 5605, are covered by the entry for imitation zari thread or yarn attracting 5% GST rate. However, no refund will be allowed on polyester film (metallised) /plastic film on account of inversion.

Earlier, in 50^th GST Council Meeting, the rate of GST on Imitation Zari thread or yarn has been reduced from 12% to 5%.

2. Exemption from GST

A. Conditional IGST Exemption to Foreign-owned costal vessels doing coastal runs in India are exempted from IGST. Earlier, Foreign going vessels are liable to pay 5% IGST on the value of the vessel if it converts to coastal run.

B. To exempt Extra Neutral Alcohol (ENA) both Grain-based and molasses-based used to manufacture alcoholic liquors for human consumption. However, GST rate on ENA for industrial use will be taxable at 18%, for which separate HSN code will be introduced.

C. To exempt services of water supply, public health, sanitation conservancy, solid waste management and slum improvement and upgradation supplied to Governmental Authorities.

D. Retain the exemption specified under Entry No. 3 and 3A of NN. 12/2017-Central Tax(Rate) relating to  “Pure and Composite services provided to 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.”

3. Clarification on rates on services:

A. Job work services: Job work services for processing of barley into malt will attracts GST @ 5% as applicable to “job work in relation to food and food products” and not 18%.

B. To Clarify that the District Mineral Foundations Trusts (DMFT) set up by the State Governments across the country in mineral mining areas are Governmental Authorities and thus eligible for the same exemptions from GST as available to any other Governmental Authority.

C. Supply of all goods and services by Indian Railways shall be taxed under Forward Charge Mechanism to enable them to avail ITC. This will reduce the cost for Indian Railways.

4. Amnesty Scheme for Appeal filing against demand orders upto 31^st January, 2024.

To provide an amnesty scheme or taxable persons, who could not file an appeal under section 107 of the said Act, against the demand order under section 73 or 74 of CGST Act, 2017  passed on or before the 31st day of March, 2023, or whose appeal against the said order was rejected solely on the grounds that the said appeal was not filed within the time period specified in sub-section (1) of section 107.

In all such cases,  filing of appeal by the taxpayers will be allowed against such orders upto 31^st January 2024, subject to the condition of payment of an amount of pre-deposit of 12.5% of the tax under dispute, out of which at least 20% (i.e. 2.5% of the tax under dispute) should be debited from Electronic Cash Ledger.

5. Removal of ambiguity and legal disputes on various GST issues:

A) Clarification on various issues related to Place of Supply: To clarify the place of supply in respect of the following supply of services:

(i) Supply of service of transportation of goods, including by mail or courier, in cases where the location of supplier or the location of recipient of services is outside India;

(ii) Supply of advertising services;

(iii) Supply of the co-location services/ data centres: Suggesting Data center services to be treated as export and not subject to GST in case of overseas customer. Circular likely to say Data centers with contracts only for providing physical space on rent then GST to be applicable at 18%.

B) Taxability on Corporate guarantees and Personal guarantees:

• • Personal Guarantees: No GST on personal guarantee given by director of a company to the banks, financial institutions, when no consideration is paid by the company to the director in any form, directly or indirectly.
  • Corporate Guarantee: For corporate guarantees provided to related parties, including guarantee by the holding company to its subsidiary, it is recommended to insert a new sub-rule (2) in Rule 28 of the CGST Rules, 2017, to provide taxable value of supply of corporate guarantee as Higher of (i) 1% of the amount of such guarantee offered or (ii) Actual consideration.

Also, the value of such supply of services of corporate guarantee provided between related parties would be governed by the proposed sub-rule (2) of rule 28 of CGST Rules, 2017, irrespective of whether full ITC is available to the recipient of services or not.

 C) Export remittance received in Special INR Vostro account to be treated as Export of services: To clarify that the admissibility of export remittances received in Special INR Vostro Account as permitted by RBI, for 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.

D) IGST refund route to the suppliers supplying goods or services to the Special Economic Zone developer or the Special Economic Zone unit for authorised operations .

6. Streamlining compliances under GST

Provision for automatic restoration of provisionally attached property after completion of one year: To Amend Rule 159 of the CGST Rules, 2017 and FORM GST DRC-22, to provide that the order for provisional attachment in FORM GST DRC-22 shall not be valid after expiry of one year from the date of the said order. This will facilitate release of provisionally attached properties after expiry of period of one year, without need for separate specific written order from the Commissioner. 

7. Miscellaneous: 

GST Appellate Tribunal: Amendment in Section 110 of the CGST Act, 2017 to approve the terms and qualifying age limits of GST appellate tribunals.

• Minimum age for President and members to be 50 years
• Increase the tenure of President from 67 years to 70 years, and that of Members from 65 years to 67 years.
• Advocate with minimum experience of 10 years in indirect tax – to be eligible for the appointment as judicial member.

The Press Release can be accessed at https://pib.gov.in/PressReleasePage.aspx?PRID=1965431