GST Council clarifies on corporate, personal guarantee; tweaks age limits in Appellate Tribunal, ET LegalWorld | Court Practice News


On Saturday, under the chairpersonship of Union Minister for Finance & Corporate Affairs Smt. Nirmala Sitharaman 52nd GST Council met in New Delhi.

The meeting was attended by Union Minister of State for Finance, Shri Pankaj Chaudhary, Chief Ministers of Goa and Meghalaya holding finance portfolios, Finance Ministers of States & UTs (with legislature) and senior officers of the Ministry of Finance & States/ UTs.

The recommendations were related to GST rates of goods and services, measures for facilitation of trade, and other measures pertaining to law and procedure.

The GST Council recommended GST rates on “Food preparation of millet flour in powder form, containing at least 70% millets by weight”, to be 0% if sold in other than pre-packaged and labelled form whereas GST of 5% to be levied if sold in pre-packaged and labelled form.

The GST Council further recommended keeping Extra Neutral Alcohol (ENA) used for the manufacture of alcoholic liquor for human consumption outside GST. However, the question of the required amendment to to exclude ENA for use in the manufacture of alcoholic liquors for human consumption from the ambit of GST shall be examined by the Law Committee later. Meanwhile, The GST rate notification will be amended to create an entry for ENA for industrial use attracting 18% GST.

The GST on molasses has been reduced from 28% to 5% to increase the liquidity with mills and enabling faster clearance of cane dues to sugarcane farmers.

On the GST rates of services, the GST Council recommended exempting services of water supply, public health, sanitation conservancy, solid waste management, and slum improvement and upgradation supplied to Governmental Authorities.

The Council recommended an amnesty scheme through a special procedure under section 148 of the CGST Act, 2017 for taxable persons, to file of appeals against demand orders in cases where appeal could not be filed within the allowable period.

The announcement of extension in time period for filing appeal before the first appellate authorities, in case of demand orders passed on or before 31 March 2023, is welcomed as parties were unable to file appeals within time due to lack of awareness, technical issues as well as disruptions due to pandemic.Gyanendra Tripathi, Partner, Indirect Tax, BDO India

The amnesty scheme shall facilitate a large number of taxpayers, who could not file an appeal in the past within the specified time period.

The recommendation to determine the value of supply as one percent of amount of guarantee, when guarantee is given without consideration by a corporate and nil value, when a guarantee is given by the director without consideration, brings an end to divergent practices being adopted for valuationGunjan Prabhakaran, Partner & Leader, Indirect Tax, BDO India

The recommendation clears the doubts on taxation of corporate guarantee, as the council recommended that the parent company’s corporate guarantee to its subsidiary for a bank loan will attract 18 percent GST. However, there will be no GST levied on the personal guarantee given by a director of a company raising loans from the market.

The council also recommended an alignment of provisions of the CGST Act, 2017 with the provisions of the Tribunal Reforms Act, 2021 in respect of Appointment of President and Member of the proposed GST Appellate Tribunals.

The Summary of Recommendations from the 52nd GST Council Meeting
GST Council recommended amendments in conditions of appointment of President and Member of the proposed GST Appellate Tribunals regarding eligibility and age.
GST Council recommended a nil rate for food preparation of millet flour in powder form and contain at least 70% millets by weight when sold in loose form, and 5% if sold in pre-packaged and labelled form.
GST Council recommended keeping Extra Neutral Alcohol (ENA) used for the manufacture of alcoholic liquor for human consumption outside GST.
GST Council recommended reducing GST on molasses from 28% to 5% in relief to cane farmers for faster clearance of dues and to reduce the cost of manufacturing cattle feed.
GST Council recommended conditional and limited duration IGST exemption to foreign flag foreign going vessel when it converts to coastal run to promote tourism.

  • Published On Oct 9, 2023 at 05:38 PM IST

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