In a series of recommendations, the GST Council (GSTC)on Saturday is likely to pave the way for industry from retrospective demands, where due to lack of clarity, the industry as a whole had been paying taxes at a different rate, as against what the government has prescribed in black and white later on.

Sources said council via “amendment and including a new section 11A, council can extend powers, to not to recover duties not levied or short-levied as a result of general practice under GST Acts, as and when it feels, a particular sector needs this clarity.”

This will be an enabling provision, which can be exercised, by issuing orders, where the government feels, the dues should not be recovered, sources added.

Sources revealed to CNBC-TV18 that sectors which paid GST at a lower rate than that later applied by authorities may receive relief from retroactive action. The GST Council (GSTC) is considering a proposal to prevent the imposition of higher GST rates when the lower rate was paid due to general trade practices.

Additionally, the amended GST law will likely disallow GST refunds or cess in cases where higher GST demands have already been paid. This measure could ensure that companies are not penalised for past compliance based on prevailing trade practices and regulatory ambiguities, sources added.

Apart from this, the council is likely to ask the Group of Ministers on Rate rationalisation to consider the request by the fertilizer sector to exempt them from GST, sources added.

Sources said the council-nominated fitment committee is understood to have suggested that “the Group of Ministers (GoM) on rate rationalisation, should take a call on whether GST should be exempted from the current 5%, on fertilizers,” sources added.

“However, the committee cautioned against a blanket GST exemption for fertilisers, chemicals, and nutrients, citing potential duty inversion and capital blocking for the industry. Thus, suggested referring the proposal to the GoM for a more comprehensive review,” sources added.

The Fitment Committee also urged that the argument to exempt GST on fertilizer has been supported by the Standing Committee on Chemicals & fertilizers, which proposed the GST Council to consider the request.

“The stance given by the standing committee is strong and this matter has been earlier discussed by the 45th and 47th GST Council meetings that However did not lead to any conclusive recommendations,” sources in the know of the agenda shared.

Further sources have informed CNBC-TV18 that the GST Council (GSTC) may consider exempting the compensation cess on aerated and energy drinks sold at unit-run and army canteens. These beverages attract a 28% GST plus a 12% cess. The Fitment Committee has recommended exempting the 12% compensation cess levied on aerated and energy drinks, sources added.

Source: CNBC TV 18