Sunset clause for anti-profiteering under GST regime

The Council recommended that starting April 1, 2025, no new applications regarding anti-profiteering would be accepted by Competition Commission of India (CCI).
Union Finance Minister Nirmala Sitharaman chairs the 53rd GST Council meeting, in New Delhi, Saturday, June 22, 2024.
Union Finance Minister Nirmala Sitharaman chairs the 53rd GST Council meeting, in New Delhi, Saturday, June 22, 2024.Photo | PTI

NEW DELHI: The GST Council in its 53rd meeting under the Chairmanship of Finance Minister Nirmala Sitharaman on Saturday proposed major relief to taxpayers by recommending sunset clause for the anti-profiteering provisions.

It recommended that starting April 1, 2025, no new applications regarding anti-profiteering would be accepted by Competition Commission of India (CCI).

Meanwhile, the Council also proposed that anti-profiteering cases would be shifted to the GST Appellate Tribunal (GSTAT) from the CCI.

Revenue Secretary Sanjay Malhotra during the press conference clarified, “The sunset date is April 1, 2025. However, the cases which have already been registered will continue to be heard and they will be decided. The other decision taken in this regard is shift of the hearing of these cases from the CCI to the principal the GSTAT when it is functional.

Appreciating the Council’s decision on anti-profiteering, Pratik Jain, Partner with Price Waterhouse & Co LLP, said, “In view of anti-profiteering provisions in existence, there was always a possibility of a dispute in case of price increase by industry, even though it was because of rise in costs or market dynamics. Since it has been about 7 years of GST implementation, ideally pricing should be determined by market forces and not by law. Hence, a sunset clause is a welcome step.”

The Council proposed rules about how to calculate the value of services involving corporate guarantees between related parties and a circular will be issued in this regard. This change is effective from October 26, 2023, and they clarified that there won’t be any tax when these services are exported or when the recipient can claim full input tax credit.

Union Finance Minister Nirmala Sitharaman chairs the 53rd GST Council meeting, in New Delhi, Saturday, June 22, 2024.
GST Council fixes monetary limit for filing appeals, changes rates for some products and services

“Interestingly, with respect to GST applicability on corporate guarantee, the Council has taken the view that there will be exemption when the goods and services are subject to tax. In other words, the Council has taken the view that there will not be any applicable tax, when the credit of the tax on corporate guarantee would be utilised against the output liability. As a corollary, there will be tax cascading due to the applicability of GST on corporate guarantee,” explained Abhishek A Rastogi, founder of Rastogi Chambers, who is addressing this issue for the tax payers before various forums.

“The other disputed aspect is that the Council intends to create two classes for taxing the corporate guarantee, first when the goods and services are subject to tax and the other when these goods and services are not subject to tax. The challenge with respect to corporate guarantee before the jurisdictional courts is expected to continue based on lack of intelligible differentia,” stated Rastogi.

Further, in a bid to reduce litigation, the Council recommended monetary limits, subject to certain exclusions, for filing appeals in GST cases before different courts. The proposed limits are: Rs 20 lakhs for GSTAT, Rs 1 crore for the High Court, and Rs 2 crore for the Supreme Court. The Council also recommended reducing the amount of pre-deposit for filing of appeals under GST to ease cash flow and working capital blockage for the taxpayers. The maximum amount for filing appeal with the appellate authority has been reduced from Rs 25 crore (CGST) and Rs 25 crores ( SGST) to Rs 20 crore (CGST) and Rs 20 crore (SGST). Further, the amount of pre-deposit for filing appeal with the Appellate

Tribunal has been reduced from 20% with a maximum amount of Rs 50 crore CGST and Rs 50 crore SGST to 10 % with a maximum of Rs 20 crore CGST and Rs 20 crore SGST.

Krishan Arora, Partner, Grant Thornton Bharat, said, “In its endeavour to streamline the litigation process under GST, the Council introduced a new monetary limit for filing appeals by the tax department up to the Supreme Court. Additionally, the maximum amount for pre-deposit required to file an appeal before the appellate authority and Tribunal has been reduced, with prospective application. An amendment in the law will now provide that the time limit for filing appeals before the tribunal will commence from the date of government notification.”

Sitharaman expressed the Centre’s desire to bring petrol and diesel under GST. She mentioned that the original intention of GST, introduced by former finance minister Arun Jaitley, was to include petrol and diesel. However, she emphasised that it is ultimately up to the states to collaborate and make the decision to bring petrol and diesel under GST. The Centre’s stance is clear - they aim to incorporate petrol and diesel into the GST framework, she said.

Union Finance Minister Nirmala Sitharaman chairs the 53rd GST Council meeting, in New Delhi, Saturday, June 22, 2024.
Finance Minister Sitharaman promises easier compliance at GST Council meeting

Sitharaman during the conference also said there are eleven new ministers in the GST Council. “So Andhra Pradesh has a new minister, Bihar, Chattisgarh, Haryana, Madhya Pradesh, Mizoram, Odisha, Rajashtan, Sikkim, Telangana and Tripura have new ministers,” she said.

The Council also proposed waiver of interest and penalties on demand notices issued under Section 73 for the financial years 2017-18, 2018-19, and 2019-20, applicable if the tax is fully paid by March 2025. The Council also proposed extending the time limit to avail input tax credit for invoices or debit notes for financial years up till 2020-21 for any GSTR-3B return filed until November 30, 2021, with a retrospective amendment effective from July 1, 2017.

They recommended amending the CGST Act to reflect this change. Additionally, the Council suggested reducing the Tax Collected at Source (TCS) rate for Electronic Commerce Operators (ECOs) from 1% to 0.5% to help lessen the financial load on suppliers using these platforms. Besides this, the GST Council also proposed a uniform GST rate of 12% on all types of milk cans, regardless of their material (steel, iron, or aluminum) based on their standard shape designed specifically for milk storage.

Changes in GST rates

  • A uniform rate of 5% IGST will apply to imports of ‘parts, components, testing equipment, tools and tool-kits of aircrafts, irrespective of their HS classification to provide a fillip to maintenance, repair & overhaul (MRO) activities subject to specified conditions

  • GST rate on ‘carton, boxes and cases of both corrugated and non-corrugated paper or paper-board’ (HS 4819 10; 4819 20) to be reduced from 18% to 12%

  • All milk cans (of steel, iron and aluminium) irrespective of their use will attract 12% GST

  • All solar cookers, whether single or dual energy source, will attract 12% TAX

  • In an effort to dispel the myth that GST has made the life difficult for the common man, the finance ministry released data comparing taxes on several goods and services before GST and after GST, showing lower tax rates under the new indirect tax regime

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