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​published on 30 October 2024 I reading time approx. 10 minutes


IDT Developments and Associated Procedures​

1. Highlights in 54th GST Council Meeting​

The 54th GST council meeting was held on 09 September 2024 in New Delhi.
The major recommendations/clarifications/amendments discussed in the said meeting are, as follows: 

a. Various changes/clarifications in the applicable HSN code, GST rate, applicability of GST under RCM as well as exemption benefit on various goods and services such as:​
  • Reduction in GST rate on cancer drugs, namely, Trastuzumab Deruxtecan, Osimertinib and Durvalumab from 12 per cent to 5 per cent; 
  • ​Increase in car seat rate from 18 per cent to 28 per cent; 
  • Applicability of GST under RCM basis on transaction of purchase of metal scrap from unregistered supplier; ​
  • GST exemption on affiliation services provided by State /Central educational boards/councils and similarly placed bodies to Government schools, research and development services provided by Government Entities or other institutions registered under Section 35(1)(ii) or (iii) of the Income Tax Act, 1961 using government or private grants. However, the benefit of these exemptions would be provided from prospective basis. 

b.  Certain clarifications were provided regarding the implementation of the amnesty scheme for availing waiver of interest or penalty or both in respect of tax demands under Section 73 of CGST Act, 2017 for FY 2017-18, 2018-19 and 2019-20.

c. New trade facilitation measures were suggested for:
  • A pilot rollout of B2C e-invoicing, building on the successful implementation of B2B e-invoicing
  • ​​Implementation of Invoice Management System (‘IMS’) and new RCM ledger

​

2. The Hon’ble Gauhati High Court held that the Notification No.56/20123-CT is ultra vires the GST Regulation and the same is not legally sustainable in law:

Multiple writ petitions were filed before the Hon’ble Gauhati High Court challenging Notification No. 56/2023 for extending time period for issuing demand orders for FY 2018-19 till 30 April 2024  and for FY 2019-20 till 31 August 2024.

3. The Hon’ble Madras High Court held that the GST authorities shall issue year wise notice to the taxpayer which can enable the taxpayer to avail the benefit under Section 128A of the CGST Act, 2017 from payment of interest and penalty from 1 November 2024

In case of Uno Minda Limited [TS-624-HCMAD-2024-GST], the Hon’ble High Court held that the tax authorities shall issue separate show cause notices for each assessment years which will enable the assessee to claim the benefit of Section 128A from 1 November 2024.  However, the Hon’ble High Court granted the relief subject to condition that assessee will not raise a question on limitation and claim refund of GST already paid under protest. 

4.The Hon’ble Karnataka High Court held that penalty under Section 11(2) of the Foreign Trade (Development and Regulations) [FTDR] Act, 1992 for non-fulfilment of export obligation by EOU:

In case of Such Silk International Ltd. [2024(7) TMI 628-Karnataka High Court], the Hon’ble High Court held that imposing penalty under Section 11(2) of FTDR Act, 1992 on grounds of shortfall in the export of manufactured goods by an EOU assessee is without authority. It is invokable only when the person attempts to or succeeds in making import or export in contravention of the provisions of FTDR Act and there is no such allegation in the present case.  The Hon’ble High Court relied upon the decision given by the Hon’ble Supreme Court in case of EMBIO Ltd. 

Important GST Notifications and Circulars issued during the quarter​

1. Exemption from filing Annual Return:​

Vide Notification No. 14/2024-Central tax dated 10 July 2024, the CBIC has exempted registered persons from filing Annual Return in FORM GSTR-9 for the financial year 2023-24 in cases where the aggregate turnover is not exceeding INR 20 million. 


2. Mandatory distribution of ITC through Input Service Distributor w.e.f. 1 April 2025:​

Vide Notification No. 16/2024-Central Tax dated 6 August 2024, the provisions making ISD mechanism mandatory for distribution of common ITC on input services procured from third parties were made effective from 1 April 2025. The changes were introduced by substituting Section 2(61) and 20 of the CGST Act, 2017 vide the Finance Act, 2024. 

3. Updates regarding Anti-profiteering provisions:​

a. Empowering Principal bench of GST Appellate Tribunal (GSTAT) to hear cases:

Vide Notification No. 18/2024 – Central Tax dated 30 September 2024, the CBIC has notified the Principal Bench of GSTAT to hear cases of anti-profiteering. 

b. Sunset clause for National Anti-Profiteering Authority to accept request for examination:
Further, vide Notification No. 19/2024–Central Tax dated 30 September 2024, the CBIC has notified 1 April 2025 as the date from which the National Anti-Profiteering Authority shall not accept any requests for examination as to whether ITC availed by any registered person or the reduction in the tax rate have actually resulted in a commensurate reduction in the price of the goods or services or both supplied by that registered person.


4. Clarifications issued by way of Circulars/Instructions:​

  • ​Vide Circular 224/18/2024 - GST dated 11 July 2024, the CBIC has provided guidelines for recovery of outstanding dues in cases wherein the first appeal has been disposed of till the Appellate Tribunal comes into operation including adjustment of amounts paid inadvertently through FORM DRC-03.
  • Vide Circular 225/19/2024 - GST dated 11 July 2024, the CBIC has provided further clarity on the valuation of service in the nature of providing Corporate Guarantee between related party subsequent to insertion of Rule 28(2) of the CGST Rules, 2017 and clarifies taxability of transactions that occurred before the insertion of this rule.
  • Vide Circular 226/20/2024 - GST dated 11 July 2024, the CBIC has laid down the mechanism and procedure to claim refund of IGST in case of subsequent upward revision of export prices and deposit of the refund amount in case of downward revision of export prices.
  • Vide Circular 228/22/2024 - GST dated 15 July 2024, the CBIC has clarified GST applicability on various services such as GST applicability on the statutory collections made by the Real Estate Regulatory Authority (RERA) in accordance with the Real Estate (Regulation and Development) Act, 2016, GST exemption on the transactions between Special Purpose Vehicles (SPVs) and the Ministry of Railways, GST exemption on the outward supplies made by the Ministry of Railways, GST liability on the reinsurance of specified general and life insurance schemes, etc.
  • Vide Circular 229/23/2024 - GST dated 15 July 2024, the CBIC has provided certain clarifications regarding GST rates & classification of goods based on the recommendations of the 53rd GST Council meeting, such as GST rate on solar cookers, poultry-keeping machinery, scope of expression 'pre-packaged and labeled' for supply of agricultural farm produce, supplies of goods made to or by an agency engaged by the government, etc.
  • Vide Circular 230/24/2024 - GST dated 11 September 2024, the CBIC has addressed various issues regarding whether or not the services provided by the Indian advertising agency to the foreign client would be treated as ‘intermediary services.’
  • Vide Circular 231/25/2024 - GST dated 11 September 2024, the CBIC has provided clarification related to the availability of ITC on the demo vehicles which the authorized dealers are required to maintain at their sales outlet as per the dealership norms and are used for providing trial runs to the potential buyers.
  • Vide Circular 232/26/2024 - GST dated 11 September 2024, the CBIC has addressed concerns regarding the nature and place of supply for data hosting services provided by Indian companies to overseas cloud computing service providers i.e. whether such services can be treated as an ‘intermediary’ service, how to determine the place of supply of such services, etc.
  • Vide Circular 233/26/2024 - GST dated 11 September 2024, the CBIC has provided clarification regarding regularization of refund of IGST availed in contravention of rule 96(10) of CGST Rules, 2017, in cases where the exporters had imported certain inputs without payment of integrated taxes and compensation cess. It was clarified that IGST refund on exports do not contravene Rule 96(10) if IGST and compensation cess along with the interest is paid on imported inputs later.

Customs and Foreign trade policy related developments

1. RoDTEP benefit extended to SEZ units

The CBIC vide Notification No. 50/2024-Customs(N.T.) dated 19 July 2024 has allowed SEZ exports to receive Remission of Duties and Taxes on Export Products (‘RoDTEP’) benefits effective from 1 July 2024.


2. Exports related benefits extended to exports made through courier​

The CBIC vide Notification No. 60/2024-Customs(N.T.) dated 12 September 2024 has amended the Courier Imports and Exports (Electronic Declaration and Processing) Regulations, 2010 to provide export related benefit under Duty Drawback, RoDTEP and Rebate of State and Central Taxes and Levies (‘RoSCTL’) schemes and EOU scheme, and similar schemes under Chapter 6 of the Foreign Trade Policy to exports made through courier. Further, Circular No. 15/2024-Customs dated 12 September 2024 has been issued to clarify the modalities in this regard.


3. Classification and duty exemption to Laboratory Chemicals for use in Laboratory or for Research & Development​

The CBIC vide Notification No. 41/2024-Customs dated 31 July 2024 has extended the benefit of reduced BCD@10 per cent on import of Laboratory Chemicals (excluding undenatured ethyl alcohol of any alcoholic strength) for use in Laboratory or for Research & Development. 

Further, the CBIC has issued another Notification No. 62/2024-Customs (N.T.) dated 19 September 2024 re-defining the scope of Heading 9802 - Laboratory Chemicals. As per the new provision, heading 9802 will cover laboratory chemicals imported and intended only for own use in packings not exceeding 500 gms or 500 milliliters. Circular No. 18/2024-Customs dated 23 September 2024 was also issued to clarify that laboratory chemicals imported for trading, further sale, etc. and where the packaging exceeds 500 gms or 500 milliliters, will be out of the scope of Heading 9802.

4. Automation of Customs IGCR Rules, 2022 for EOUs from 1 September 2024​

The CBIC vide Circular No. 11/2024-Customs dated 25 August 2024 read with Circular No. 13/2024-Customs dated 4 September 2024 and Circular No. 16 /2024-Customs dated 17 September 2024 has decided to implement automation of Customs (Import of Goods at Concessional Rate of Duty or for Specified End Use) Rules, 2022 (‘IGCR Rules’) for EOUs from 25 September 2024. Accordingly, all EOUs would be required to obtain IGCR Identification Number (IIN) at ICEGATE portal, and also register their IGCR bond for filing a bill of entry with IGCR benefit. 


5. Digitization of customs procedures related to bonded warehouses​

The CBIC vide Circular No. 19/2024-Customs dated 30 September 2024 has issued warehouse module to enable online filing of application for obtaining warehouse license, online submission of requests for transfer of goods from one warehouse to another and uploading of monthly returns for the Customs Bonded Warehouse.

6. Digitalization of customs examination and clearance process​

In view of objective of trade facilitation and for speedy examination of import consignments, the CBIC issued a Circular No. 10/2024 dated 20 August 2024 which will enable the customs authorities to use ICETAB.  ICETAB contains an exclusive mobile application to enable view examination order along with supporting documents, upto four images of cargo examination, and submit examination report immediately on completion of cargo examination which will reduce time taken for examination process and making process seamless and paperless.

7. Procedure for provisional attachments of bank account

The CBIC vide Instruction No. 19/2024 dated 22 July 2024 has written order directing the provision attachment the bank account shall be served on the bank account holder as well.  Further, such power should be exercised only after thoroughly considering and examining the facts of the case which includes examining  nature  of  offence,  amount  of  revenue  involved  or  value  of smuggled  goods,  availability  on  record  of  material  having  value  as  evidence.

Further it is instructed that the proper officer shall duly record such reason in the file and seek a written approval from Principal Commissioner or Commissioner of Customs and the communication must bear the Document Identification Number in terms of Circular No. 37/2019-Customs dated 5 November 2019 as amended from time to time.

8. Other Miscellaneous Updates in FTP and SEZ:​

  • Vide Notification 25/2024-FTP dated 02 September 2024, the Central Government has amended Appendix- 3 (SCOMET Items) to Schedule -2 of ITC (HS) Classification of Export and Import Items 2018.
  • Vide Notification 32/2024-FTP dated 30 September 2024, the RoDTEP scheme is extended for exports made from DTA units till 30 September 2025 and AA/EOU/SEZ units till 31 December 2024. The revised rates as in Appendix 4R and Appendix 4RE are also notified for implementation w.e.f. 10 October 2024 once the ICEGATE portal is updated with new rates.
  • Vide Public Notice 15/2024-25 dated 25 July 2024 and 24/2024-25 dated 20 September 2024, certain provisions of Chapter 5 related to Export Promotion Capital Goods Scheme of the Handbook of Procedures, 2023 are amended for EPCG authorizations issued under FTP with a view to enhance ease of doing business and reduce compliance burden.
  • Vide Public Notice 18/2024-25 dated 22 August 2024, Chapter 4 of the Handbook of Procedures has been amended by inclusion of all types of Shipping Bills in lieu of Destruction Certificate and simplified provision for re-export of unutilised drugs removing the need to re-export to the same supplier for ease of doing business and reduction of compliance burden.
  • Vide Trade Notice No. 7/2024-25 – DGFT dated 28 June 2024, the DGFT had extended the Interest Equalization Scheme for Pre and Post Shipment Rupee Export Credit up to 31 August 2024. Now, the same was further extended till 31 December 2024 on the same conditions as the earlier extension with the additional condition that fiscal benefit of each MSME on aggregate will be restricted to INR 5 million for FY 2024-25 till December 2024.
  • Vide Trade Notice No. 09/2024-25 dated 23 July 2024, the DGFT has introduced a Unique Document Identification Number (UDIN) which would be embossed at the top-right corner for all electronically issued Licenses, Authorizations, Scrips, Certificates, Instruments etc. by the DGFT in order to verify the authenticity of such documents.
  • Vide Trade Notice No. 10/2024-25 dated 25 July 2024, that Ministry of Steel had proposed to launch an updated version 2.0 of the Steel Import Monitoring System (SIMS). The SIMS 2.0 was launched on 25 July 2024 from 2:00 pm. Further to the launch of SIMS 2.0, the current SIMS 1.0 as hosted on the DGFT Website (https://dgft.gov.in) will be discontinued with immediate effect. However, the applications already submitted on SIMS 1.0 will be available to view or download from the DGFT website until further notice.
  • Vide Trade Notice No. 11/2024-25 – DGFT dated 2 August 2024, the DGFT has decided to harmonize Chapter 48 to 98 of Schedule II (Export Policy) to ITC(HS) codes to streamline the process of Export Control and Facilitation, and also to provide greater clarity and easy reference to Export Policy for all stakeholders.
  • Earlier, vide Trade Notice No. 33/2023-24 dated 10 November 2023, the DGFT piloted an online self-certification process for the electronic Bank Realization Certificate (eBRC), aimed at simplifying and streamlining the reconciliation of export realizations for both merchandise and service sectors. To further facilitate the eBRC self-certification process, the DGFT introduced two additional functionalities vide Trade Notice No. 12/2024-25 dated 14 August 2024 effective from 20 August 2024 i.e. API Integration and Bulk Upload facility for Self-Certification of eBRC. 
  • Vide Trade Notice No. 13/2024-25 – DGFT dated 16 August 2024, the DGFT has launched Revamped Non-Preferential Certificate of Origin (eCoO) 2.0 System. This upgraded system will offer several new and user-friendly features aimed at streamlining the certification process for exporters.

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