GST Council recommends notifying amnesty scheme effective 1 November 2024 and proposes various trade facilitation measures

This Tax Alert summarizes the recent press release[1] issued by the Ministry of Finance on various recommendations made by the Goods and Services Tax (GST)Council in its 54th meeting held on 9 September 2024.

The key recommendations are:

• Group of Ministers (GoM) to be constituted to look into the issues pertaining to GST on life and health insurance and to study the future of compensation cess.
  
  
• Amnesty scheme providing waiver of interest and penalty in non-fraud cases for FY 2017-18 to 2019-20 to be notified w.e.f. 1 November 2024. Further, the tax demand as per the notice or order is required to be paid on or before 31 March 2025 to avail the benefit.
  
  
• Mechanism to be provided for implementation of newly inserted Section 16(5) and 16(6) of the Central Goods and Services Tax Act, 2017 (CGST Act).
  
  
• Rule 96(10), 89(4A) and 89(4B) of the Central Goods and Services Tax Rules, 2017 (CGST Rules) restricting refund in certain scenarios to be omitted prospectively.
  
  
• Import of services by an establishment of foreign airlines from a related entity or its establishments outside India without consideration to be exempted, with past demands being regularized on “as is where is” basis.
  
  
• B2C e-invoicing will be rolled out on pilot basis in selected sectors and States.
  
  
• Circulars to be issued to clarify place of supply for advertising and data hosting services provided to entities outside India as well as to clarify availability of input tax credit on demo vehicles in the hands of dealers.

Comments

• Omission of Rule 96(10), 89(4A) and 89(4B) is likely to help in reducing working capital blockage and alleviate difficulties faced by exporters. 
  
  
• Exemption provided to foreign airlines on import of service from related parties may provide much needed relief to airline sector from the ongoing dispute. It may be represented to the Government to provide similar exemption to foreign shipping lines having same business model.
  
  
• DGGI has recently issued notices to various educational institutions, including IITs and universities demanding GST on the research grants received by them. Allowing exemption on such grants and regularizing past cases may provide relief to such institutions.
  
  
• West Bengal AAAR in case of Bengal Peerless Housing Development Company [2019 (30) G.S.T.L. 652 had ruled that preferential location charges cannot be treated as a part of composite supply as it is not naturally bundled with the main supply of construction service. Issuance of Circular treating the same as composite supply is likely to benefit businesses in real estate sector.
  
  
• Gujarat HC in case of Torrent Power Ltd [2020 (34) G.S.T.L. 385 (Guj.)] had earlier struck down Circular No. 34/8/2018-GST which clarified that various ancillary charges collected by DISCOMs from consumers are liable to GST. HC had held that these charges have direct nexus and are naturally bundled with services of transmission and distribution of electricity and are not subject to GST. This matter is currently pending before the Supreme Court [2020 (34) G.S.T.L. J137 (S.C.)].
  
  
• Prior to 1 October 2021, licensing services for the right to use the intellectual property of films was taxed @ 12% and motion picture, videotape and television programme distribution services was taxed @18%. To remove disparity and classification ambiguities, GST rate on all the above licensing services was rationalized @ 18% w.e.f. 1 October 2021. Regularization of GST liability on film distribution appears to aim at resolving past classification disputes.
  
  
• Taxpayers who have suo moto reversed ITC or not availed the same considering it as time barred basis Section 16(4) for the period up to FY 2020-21, may not be covered by the procedure proposed to be notified under Section 148.
  
  
• Madras HC in case of Sree Ramu College of Arts and Science [TS-607-HC(MAD)-2023-GST] and Telangana HC in case of Care College of Nursing [TS-559-HC(TEL)-2023-GST] have held that grant or renewal of affiliation by universities to colleges are not exempt from GST.
   

[1] Press release dated 9 September 2024