The CBIC has issued Clarifications dated 13.01.2023, regarding the applicability of GST on certain services and GST rates and classification of certain goods.
These clarifications are issued to give effect to the recommendation as discussed by the GST Council in its 48th GST Council meeting held on 17th December, 2022.
A. Circular No. 190/02/2023-GST dated 13.01.2023: Regarding applicability of GST on certain services.
These clarifications are on the applicability of GST on following issues:
- Accommodation services supplied by Air Force Mess to its personnel
- incentive paid by Ministry of Electronics and Information Technology (MeitY) to acquiring banks under Incentive scheme for promotion of RuPay Debit Cards and low value BHIM-UPI transactions
Taxability of GST on Accommodation services supplied by Air Force Mess to its personnel:
The Board hereby clarified that accommodation services provided by Air Force Mess and other similar messes, such as, Army mess, Navy mess, Paramilitary and Police forces mess to their personnel or any person other than a business entity are covered by Sl. No. 6 of notification No. 12/2017 –Central Tax (Rate) dated 28.06.2017 provided the services supplied by such messes qualify to be considered as services supplied by Central Government, State Government, Union Territory or local authority.
Vide Sl. No. 6 of notification No. 12/2017 –Central Tax (Rate) dated 28.06.2017, all services supplied by Central Government, State Government, Union Territory or local authority to any person other than business entities (barring a few specified services such as services of postal department, transportation of goods and passengers etc.) are exempt from GST.
Taxability of GST on incentive paid by MeitY to acquiring banks under Incentive scheme for promotion of RuPay Debit Cards and low value BHIM-UPI transactions:
The Board hereby clarified that incentives paid by MeitY to acquiring banks under the Incentive scheme for promotion of RuPay Debit Cards and low value BHIM-UPI transactions are in the nature of subsidy and thus not taxable.
The service supplied by the acquiring banks in the digital payment system in case of transactions through RuPay/BHIM UPI is the same as the service that they provide in case of transactions through any other card or mode of digital payment. The only difference in this type of service is that the consideration for such services, instead of being paid by the merchant or the user of the card, is paid by the central government in the form of incentive. However, it is not a consideration paid by the central government for anyservice supplied by the acquiring bank to the Central Government. The incentive is in the nature of a subsidy directly linked to the price of the service and the same does not form part of the taxable value of the transaction in view of the provisions of section 2(31) and section 15 of the CGST Act, 2017.
The Circular can be accessed at https://taxo.online/wp-content/uploads/2023/01/cir-190-02-2023-cgst.pdf
B. Circular No. 189/01/2023-GST: Regarding GST rates and classification of certain goods
The clarifications made through this circular are discussed in the following tabular form.
| S.No. | Issues | Clarifications |
| 1. |
Whether “Rab” classifiable under the Tariff heading 1702. |
It is clarified that the Rab is appropriately classifiable under heading 1702 attracting GST rate of 18% (S. No. 11 in Schedule III of notification No. 1/2017-Central Tax (Rate), dated the 28th June, 2017). |
| 2. |
What is the applicable GST rate on by-products of milling of Dal/ Pulses such as Chilka, Khanda and Churi/Chuni |
Vide Notification No. 13/2022-CT(Rate) dated 30.12.2022, w.e.f. 01.01.2023, GST got exempted on supply of by-products of milling of Dal/ Pulses such as Chilka, Khanda and Churi/Chuni irrespective of its end use (Vide Sl. No. 102C) Earlier, vide Circular No. 179/11/2022-GST dated 03.08.2022 provided that GST on by-products of milling of Dal/ Pulses such as Chilka, Khanda and Churi, which inter alia is used as cattle feed ingredient would be covered under S.No. 103A classifiable under heading 2302 and attract GST at 5% rate. However, for the intervening period till 01.01.2023, are to be regularized on “as is” basis. |
| 3. |
What would be the applicable six-digit HS code for ‘Carbonated Beverages of Fruit Drink’ or ‘Carbonated Beverages with Fruit Juice. |
It is hereby clarified that the applicable six-digit HS code for the aforesaid goods with description ‘Carbonated Beverages of Fruit Drink’ or ‘Carbonated Beverages with Fruit Juice’ is HS 2202 99. The said goods attract GST at the rate of 28% and Compensation Cess at the rate of 12%. |
| 4. |
What is the classification and applicable GST rate on snack pellets manufactured through the process of extrusion (such as ‘fryums’) |
It is hereby clarified that the snack pellets (such as ‘fryums’), which are manufactured through the process of extrusion, are appropriately classifiable under tariff item 1905 90 30, which covers goods with description ‘Extruded or expanded products, savoury or salted’, and thereby attract GST at the rate of 18% vide S. No. 16 of Schedule-III of notification No. 1/2017-Central Tax (Rate), dated the 28th June, 2017 |
| 5. |
Applicability of Compensation cess on Sports Utility Vehicles (SUVs) |
It is clarified that Compensation Cess at the rate of 22% is applicable on Motor vehicles, falling under heading 8703, which satisfy all four specifications, namely: i) these are popularly known as SUVs; ii) the engine capacity exceeds 1,500 cc; iii) the length exceeds 4,000 mm; and iv) the ground clearance is 170 mm and above |
| 6. |
What is the applicable IGST rate on goods specified in the list annexed to notification No. 3/2017-Integrated Tax (Rate), dated the 28th June, 2017 |
It is hereby clarified that on goods specified in the list annexed to the notification No. 3/2017-Integrated Tax (Rate), dated the 28th June, 2017, which are eligible for IGST rate of 12% under the said notification and are also eligible for the benefit of lower rate under Schedule I of the notification No. 1/2017-Integrated Tax(Rate), dated the 28th June, 2017 or any other IGST rate notification, the importer can claim the benefit of the lower rate |
The Circular can be accessed at https://taxo.online/wp-content/uploads/2023/01/cir-189-01-2023-cgst.pdf
