GST meeting: Learning about ‘Rab’ and some movement on tribunals

One of the interesting facets of GST laws is that one learns new words.

Till the 49th meeting of the GST Council, not many would have known that there is a word called ‘Rab’, which means liquid jaggery.

For the record, the GST rate on ‘Rab’ has been reduced to 5 per cent (from 12 per cent) if sold in pre-packaged form. If sold in any other form, the rate of tax is nil. The Council has also taken the trouble to reduce the rate on pencil sharpeners from 18 per cent to 12 per cent.

The much-expected decision on the rate of tax on gaming was not taken. The Council also took some more baby steps towards making GST tribunals functional: the Council adopted the report of the Group of Ministers with certain modifications and stated that the final draft amendments to GST laws would be circulated to members for their comments.

The Council also took a decision to clear past GST dues for June 2022, amounting to Rs 16,982 crore, to state governments. Since the GST Compensation Fund is empty, the Union government decided to release this amount from its own resources, and the same amount will be recouped from future compensation cess collection.

With this, the entire provisionally admissible compensation due for five years, as envisaged in the GST (Compensation to States) Act 2017, has now been paid. It was also confirmed that the admissible final GST compensation to those states, which have provided the revenue figures as certified by the Accountant General of the states amounting to Rs 16,524 crore, would be paid soon.

The GST Compensation Fund has become sort of a current account with no overdraft facility; the collections could not match the promised compensation to state governments.

The mechanics of GST accounting and payment to states remain a maze to many. A set of FAQs on this topic released by CBIC would enlighten many on this subject.

Pan masala, gutkha and chewing tobacco companies can export only against a Letter of Undertaking, and the compensation cess on these is being changed from ad valorem to a specific tax-based levy.

The Council also clarified that if a tag-tracking device or a data logger is affixed on a container, the nil exemption under Notification No. 104/94 would apply to such devices also.

The present exemption available to educational institutions and central and state educational boards for conducting entrance examination has been extended to any authority, board or a body set up by the Union government or state government, including the National Testing Agency, for conducting entrance examination for admission to educational institutions.

The Council also recommended providing an amnesty scheme for conditional deemed withdrawal of assessment orders in past cases in which the concerned return could not be filed within 30 days of the assessment order but had been filed along with due interest and late fees up to a specified date. The proposed scheme would apply irrespective of whether an appeal has been filed or not against the assessment order, or whether the said appeal has been decided or not.

The Council also rationalised the late fee for filing annual returns through a detailed formula that seems unnecessary for annual compliance.

The detailed formula reads, “Registered persons having an aggregate turnover of up to Rs 5 crore in the said financial year: Rs 50 per day (Rs 25 CGST + Rs 25 SGST), subject to a maximum of an amount calculated at 0.04 per cent of his turnover in the state or Union territory (0.02 per cent CGST + 0.02 per cent SGST).

Registered persons having an aggregate turnover of more than Rs 5 crore and up to Rs 20 crore in the said financial year: Rs 100 per day (Rs 50 CGST + Rs 50 SGST), subject to a maximum of an amount calculated at 0.04 per cent of his turnover in the state or Union territory (0.02 per cent CGST + 0.02 per cent SGST)”.

The establishment of GST tribunals is taking way too long. Taxpayers are already at the receiving end of some orders they would want to appeal to the tribunal. With such orders increasing every day, if and when the tribunals do get up and running, they are going to be overloaded with a large backlog of cases.

Time limits for filing appeals with the tribunals and passing of orders need to be flexible. One hopes that at the 50th meeting of the GST Council, all the big-ticket items on which decisions are needed are ticked off.

(The writer is a tax expert based in
Bengaluru.)