The Goods and Services Tax (GST) Council has given its nod to a long-pending proposal for an appellate tribunal for the levy, broadly accepting the report of a ministerial group. The proposal will be included in the Finance Bill 2023.
The GST Tribunal will have one principal bench in New Delhi and as many benches or boards in states as decided by each state, subject to approval of the council. The principal bench and state boards would have two technical and two judicial members each, with equal representation from the Centre and states. But all four members would not sit for hearing each case, which is likely to be decided based on the threshold or value of dues involved. While no official timeline was given for the setting up of the tribunals, they are expected to start functioning by the end of this year.
The council also approved the GoM report on sectors like pan masala, gutkha and chewing tobacco. The recommendations include compliance and tracking measures to plug leakages and evasions, permitting exports of such commodities only against letter of undertaking with consequential refund of accumulated input tax credit, as well as changing the compensation cess levied on such commodities from ad valorem to specific tax-based levy to boost the first stage collection of the revenue. However, a capacity-based levy has not been prescribed for the sector.
The council also reduced the GST on rab to 5%, if it is sold in a pre-packaged and labelled form, and to nil in loose form. The GST on pencil sharpeners will also be reduced to 12%. Both these items are currently taxed at 18%. However, no decision was taken on reducing the GST on millets and cement, as well as a review of the compensation cess on multi utility vehicles.
The council also approved a number of measures for trade facilitation, including rationalisation of late fee for filing annual returns as well as an amnesty for taxpayers’ pending returns in forms GSTR-4, GSTR-9 and GSTR-10.
At present, a late fee of Rs 200 per day subject to a maximum of 0.5% of the turnover in the state or UT is payable in case of delayed filing of annual return in Form GSTR-9. This will now be reduced to 50 per day subject to a maximum of an amount calculated at 0.04% for registered persons with an aggregate turnover of Rs 5 crore and to Rs 100 per day with a cap of 0.04% for registered persons with an aggregate turnover of over Rs 5 crore and up to Rs 20 crore.
It also approved an extension of time limit for application for revocation of cancellation of registration and one-time amnesty for past cases. In such cases, an amnesty may be provided in the past cases, where registration has been cancelled on account of non-filing of the returns, but application for revocation of cancellation of registration could not be filed within the specified time period. The person would be allowed to file an application for revocation by a specified date, subject to certain conditions.
Finance minister Nirmala Sitharaman also decided to immediately release compensation cess dues to states totaling over Rs 33,500 crore. This includes the pending dues of Rs 16,982 crore to 23 states for June 2022, the last month of the five-year compensation period, as well as another Rs 16,524 crore as final GST compensation outgoes for six states that have submitted the respective accountant general certificates. “Since there is no amount in the GST compensation fund, the Centre has decided to release this amount from its own resources and the same will be recouped from future compensation cess collections,” Sitharaman said.
