MM TAX CLUB

Based  on  the  recommendations  of  the  GST  Council  in  its  48thmeeting  held  on  17thDecember, 2022, clarifications, with reference to GST levy, related to the following are being issued through this circular:

2.Rab -classifiable under Tariff heading 1702:

2.1Representation has been  received seeking clarification regarding the classification of "Rab".  It  has  been  stated  that  under  the  U.P.  Rab  (Movement  Control  Order),  1967,  "Rab" means‘ massecuite  prepared  by  concentrating  sugarcane  juice  on  open  pan  furnaces,  and includes Rab Galawat and Rab Salawat, but does not include khandsari molasses or lauta gur.’ Although, a product of sugarcane, Rab  exists in semi-solid/liquid form, and is thus not covered under heading 1701. The Hon’ble Supreme Court in its order in Krishi  Utpadan  Mandi Samiti vs.  M/s  Shankar  Industries  and  others  [1993  SCR  (1)1037]  has  distinguished  Rab  from Molasses.  Thus,  Rab  being  distinguishable  from  molasses  is  not  classifiable  under  heading 1703.2.2Accordingly, it is hereby clarified that 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).

3.Applicability  of  GST  on  by-products  of  milling  of  Dal/  Pulses  such  as  Chilka, Khanda and Churi/Chuni:

3.1Representations have been received seeking clarification regarding the applicable GST rate on by-products of milling of Dal/ Pulses such as Chilka, Khanda and Churi/Chuni.

3.2The GST council in its 48thmeeting has recommended to fully exempt the supply of subject goods, irrespective of its end use. Hence, with effect from the 1stJanuary, 2023, the said goods shall be exempt under GST vide S. No. 102C of schedule of notification No. 2/2017-Central Tax (Rate), dated 28.06.2017

3.3Further,  as  per  recommendation  of  the  GST  Council,  in  view  of  genuine  doubts regarding the applicability of GST on subject goods, matters that arose during the intervening period  are  hereby  regularized  on  "as  is"  basis  from  the  date  of  issuance  of  Circular  No. 179/11/2022-GST, dated the 3rdAugust, 2022, till the date of coming into force of the above-said S. No. 102C and the entries relating thereto. This is in addition to the matter regularized on as is basis videpara 8.6 of the said Circular.

4.Clarification regarding ‘Carbonated Beverages of Fruit Drink’ or ‘Carbonated Beverages with Fruit Juice’:

4.1Representations have been received seeking clarification regarding the applicable six-digit HS code for ‘Carbonated Beverages of Fruit Drink’ or ‘Carbonated Beverages with Fruit Juice’.

4.2On the basis of the recommendation of the GST council in its 45thmeeting, a specific entry has been created in notification No. 1/2017-Central Tax (Rate), dated the 28th June, 2017 and notification No. 1/2017-Compensation Cess (Rate), dated the 28th June, 2017, vide S. No. 12B in Schedule IV and S. No. 4B in Schedule respectively, with effect from the 1stOctober, 2021,  for  goods  with  description  ‘Carbonated  Beverages  of  Fruit  Drink’  or  ‘Carbonated Beverages with Fruit Juice’.

4.3It 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%. The S. Nos. 12B and 4B mentioned in Para 4.2 cover all such carbonated beverages that  contain  carbon  dioxide,  irrespective  of  whether  the  carbon  dioxide  is  added  as  a preservative, additive, etc.

4.4In  order  to  bring  absolute  clarity,  an  exclusion  for  the  above-said  goods  has  been provided in the entry at S. No. 48 of Schedule-II of notification No. 1/2017-Central Tax (Rate), dated  28thJune,  2017, vide notification  No.  12/2022-Central  Tax  (Rate),  dated  the  30thDecember, 2022.

5.Applicability  of  GST  on  Snack  pellets  manufactured  through  extrusion  process (such as ‘fryums’):

5.1Representations  have been  received seeking clarification regarding classification and applicable GST rate on snack pellets manufactured through the process of extrusion (such as ‘fryums’).

5.2It 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, 2017.6.Applicability of Compensation cess on Sports Utility Vehicles (SUVs):

6.1Representations  have  been  received  seeking  clarification  about  the  specifications  of motor vehicles, which attract compensation cess at the rate of 22% videentry at S. No. 52B of notification No. 01/2017 Compensation Cess (Rate), dated 28th June, 2017.

6.2In this regard, 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: -these are popularly known as SUVs; the engine capacity exceeds 1,500 cc; the length exceeds 4,000 mm; and the ground clearance is 170 mm and above.

6.3This  clarification  is  confined  to  and  is  applicable  only  to  Sports  Utility  Vehicles (SUVs).7.Applicability  of  IGST  rate  on  goods  specified  under  notification  No.  3/2017-Integrated Tax (Rate):

7.1Representations have been received expressing doubts regarding the applicable IGST rate  on  goods  specified  in  the  list  annexed  to  notification  No.  3/2017-Integrated  Tax  (Rate), dated the 28th June, 2017.

7.2 On  the  basis  of  the  recommendation  of  the  GST  Council in  its  47thMeeting,  held  in June  2022,  the  IGST  rate  has  been  increased  from  5%  to  12%  on  goods,  falling  under  any Chapter,  specified  in  the  list  annexed  to  the  notification  No.  3/2017-Integrated  Tax  (Rate), dated  the  28th  June,  2017,  when  imported  for  the  specified  purpose  (like  Petroleum operations/Coal bed methane operations) and subject to the relevant conditions prescribed in the  said  notification.  However,  some  goods  specified  in  the  list  annexed  to  notification  No. 3/2017-Integrated Tax (Rate), dated the 28th June, 2017, are also eligible for a lower schedule rate  of  5%  by  virtue  of  their  entry  in  Schedule  I  of  notification  No.  1/2017-Integrated  Tax (Rate), dated the 28th June, 2017.

7.3Accordingly,  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.

8.Difficulty, if any, in the implementation of this circular may be brought to the notice of the Board.

Representations have been received seeking clarifications on the following issues:

1.Applicability  of  GST  on  accommodation  services  supplied  by  Air  Force  Mess  to  its personnel

2.Applicability  of  GST  on 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. The  above  issues  have  been  examined  by  GST  Council  in  the  48thmeeting  held  on  17thDecember, 2022. The issue -wise clarifications are given below:

2. Applicability of GST on accommodation services supplied by Air Force Mess to its personnel:

2.1Reference has been received requesting for clarification on whether GST is payable on accommodation services supplied by Air Force Mess to its personnel.

2.2All 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 vide Sl. No. 6 of notification No. 12/2017 –Central Tax (Rate) dated 28.06.2017. Therefore, as recommended by the GST Council, it is 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 bySl.  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.

Circular No. 190/02/2023-GST23.Applicability 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:

3.1Representations  have  been  received  requesting  for  clarification  on  whether GST  is applicable on the incentive paid by MeitY to acquiring banks under the Incentive scheme for promotion of RuPay Debit Cards and low value BHIM-UPI transactions.

 3.2Under the Incentive scheme for promotion of RuPay Debit Cards and low value BHIM-UPI transactions, the Government pays the acquiring banks an incentive as a percentage of value of RuPay Debit card transactions and low value BHIM-UPI transactions up to Rs.2000/-.

3.3The Payments and Settlements Systems Act, 2007 prohibits banks and system providers from charging any amount from a person making or receiving a payment through RuPay Debit cards or BHIM-UPI.

 3.4The  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 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  any service  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

.3.5As recommended by the Council, it is 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.

 4.Difficulties, if any, in implementation of this circular may be brought to the notice of the Board.

Reference is invited to D.O. letter No. P.16011/02/2017-TC (Part 1) dated 09.12.2022 from the Department of Health and Family Welfare, Ministry of Health and Family Welfare (MoHF\/V}, New Delhi on the above-mentioned subject (copy enclosed).

2. Vide this DO dated 09.12.2022, MoHFW has informed that the Cigarettes and other Tobacco Products (Prohibition of Advertisement and Regulation of Trade and Commerce, Production, Supply and Distribution) Act, COTPA, 2003 is applicable to all the tobacco products and extends to whole of the country. Section 7 of the Act provides for specified Health Warning on all tobacco product packs. These rules have been amended time to time, for display of specified health warning on both sides of the tobacco product packages covering 85% of the principal display area. The rules were amended last in July, 2020 dated 21.07.2020.

3. Now, MoHFW vide Cigarettes and other Tobacco Products (Packaging and Labelling) Amendment Rules, 2022 (copy enclosed) has notified the new set of specified health warning which has come into force on the 1°’ day of December, 2022. In this regard, a Public Notice has also been published on NTCP portal and MoHFW website (copy enclosed).

4. The undersigned is directed to say that necessary action should be taken to sensitize officers in your jurisdiction and to effectively implement these new provisions.

5. The difficulties, if any, in the implementation of this Instruction may be brought to the notice of the Board. Hindi version follows.

Encl: as above

The Unique Identification Authority of India (UIDAI) has issued a set of guidelines to Offline Verification Seeking Entities (OVSEs) highlighting several usage hygiene issues, better safety mechanisms at users level, and ways to further enhance residents’ trust while using Aadhaar voluntarily for lawful purposes.

Entities have been informed to perform verification of Aadhaar after explicit consent of the Aadhaar number holder. These entities need to be courteous to residents and assure them about the security and confidentiality of their Aadhaar while conducting offline verification.

Entities must maintain the log/record of the explicit consent received from residents for any future audit by UIDAI or any other legal agency thereof.

UIDAI has also asked OVSEs to verify Aadhaar via the QR Code present on all four forms of Aadhaar (Aadhaar letter, e-Aadhaar, m-Aadhaar and Aadhaar PVC card) instead of accepting Aadhaar in physical or electronic form, as a proof of identity.

Offline verification is the use of Aadhaar for carrying out identity verification and KYC processes locally, without connecting to the Central Identities Data Repository of UIDAI. The organizations conducting offline verification of an Aadhaar number holder for a lawful purpose are called OVSEs.

Entities have been urged to ensure that no services are denied to any resident for refusing to or being unable to undergo offline verification of Aadhaar, provided the resident is able to identify himself/ herself through other viable alternatives. It has been underlined that OVSEs need to provide residents viable alternative means of identification in addition to Aadhaar, for rendering service.

Verification entities, generally should not collect, use or store Aadhaar number of the resident after having conducted offline verification of Aadhaar, UIDAI has informed OVSEs. Post verification, if the OVSE finds it necessary for any reason, to store a copy of Aadhaar, the OVSE must ensure that Aadhaar number is redacted/masked and irretrievable.

Any Aadhaar can be verified using the QR code available on all forms of Aadhaar (Aadhaar letter, e-Aadhaar, Aadhaar PVC card, and m-Aadhaar) using mAadhaar App, or Aadhaar QR code Scanner. Tampering of Aadhaar documents can be detected by offline verification, and tampering is a punishable offence and liable for penalties under Section 35 of the Aadhaar Act.

In case, they notice any misuse of information, verification entities need to inform UIDAI and the resident concern within 72 hours. UIDAI has cautioned OVSEs not to perform offline verification on behalf of any other entity or person and ensure full cooperation to the Authority or law enforcement agencies in case of any investigation involving misuse of Aadhaar. 

Section 285BA of the Income Tax Act, 1961 and Rule 114E requires specified reporting persons to furnish statement of financial transaction (8FT). For the purposes of prefilling the return of income, CBDT has issued Notification No. 16/2021 dated 12.03 .2021 to include reporting of information relating to interest income. The Format, Procedure and Guidelines for submission of Statement of Financial Transactions (SFT) for Interest income was notified via Notification 2 of 2021 dated 20th April 202 1. 

2. As per sub-rule (4)(b) of Rule 114E Director General of Income-tax (Systems) shall specify the procedures, data structures and standards for ensuring secure capture and transmission of data, evolving and implementing appropriate security, archival and retrieval policies

3. The Remarks column point 1 at Annexure A-- Guidelines for Preparation of Statement of Financial Transactions (SFT) mentioned "The information is to be reported for all account/deposit holdors where cumulative interest exceeds Rs 5,0001 per person in the financial yeaf'.

4. The Remarks column at Annexure A is hereby being modified and may be read as ~ The information is to be reported for all account/deposit holders where any interest exceeds zero per account in the financial year excluding Jan Dhan Accounts".  

5. In the view of the changes mentioned above, the limit prescribed in Notification 2 of 2021 dated 201h April 2021 stands abolished and this addendum will come into effect from  

Copy to: 1. PPS to the Chairman and Members, CBDT, North Block, New Delhi.