GST Advisory

Clarification Based on Recommendations of the 48th GST Council Meeting

The CBIC, vide its Circular No. 189/01/2023-GST dated 13th January 2023, issued Clarification regarding GST rates & classification of certain goods on the basis of the recommendations of the 48th GST Council meeting held on 17th December 2022, which shall be discussed in the present article. 

Rab -Classifiable Under Tariff Heading 1702:

• The Board received representation for clarification on the classification of the term “Rab” as provided under the U.P. Rab (Movement Control Order), 1967, wherein it is defined as massecuite prepared by concentrating sugarcane juice on the open pan furnaces and is inclusive of Rab Galawat and Rab Salawat, but not khandsari molasses or lauta gur. Despite being a product of sugarcane, Rab exists in semi-solid/liquid form and is thus uncovered under heading 1701. 
• The Apex court, in the case titled Krishi Utpadan Mandi Samiti vs M/s Shankar Industries & Ors, has distinguished Rab from Molasses. Thus, Rab being distinguishable from molasses wasn’t classifiable under the heading 1703. Accordingly, has been clarified that Rab is appropriately classifiable under heading 1702, thereby attracting a GST rate of 18% 

GST Applicability on By-Products of Milling of Dal/ Pulses Such As Chilka, Churi/Chuni Khanda 

• Another aspect which the board has provided a clarification is regarding the GST applicability rate on by-products of milling of Pulses / Dal such as Chilka, Churi/Chuni, and Khanda and as it was recommended exempt the supply of such goods under GST irrespective of its end use hence the same has become effective from 1st January 2023.
• Further, according to GST Council’s recommendations, due to genuine doubts pertaining to the GST Applicability on subject goods, matters which arose during the intervening period are regularized on an “as is” basis from the date of issuing Circular No. 179/11/2022-GST, dated the 03.08. 22 till the date of coming into force of the above-said S. No. 102C and the entries pertaining thereto. This is additionally to the matter regularized on “as is” basis vide para 8.6 of the said Circular.

Carbonated Beverages of Fruit Drink’ or ‘Carbonated Beverages with Fruit Juice’

• The clarification regarding the applicable 6 digits HS code for the ‘Carbonated Beverages of Fruit Drink’ or ‘Carbonated Beverages with Fruit Juice’ was also sought from the Board. 
• Relying on the recommendations of the 45th GST council^[1] meeting, there has been a creation of a specific entry in notification No. 1/2017-Central Tax (Rate), dated the 28.06.2017 and notification No. 1/2017- Compensation Cess (Rate), vide S. No. 12B in Schedule IV and S. No. 4B in Schedule respectively, wef 01.10.21, for goods having description ‘Carbonated Beverages of Fruit Drink’ or ‘Carbonated Beverages with Fruit Juice’. 
• Therefore the Board provided the clarification that the HS Code for the above-mentioned item shall be HS 2202 99, which shall attract a GST @ 28% and Compensation Cess @ 12%. The S. Nos. 12B and 4B specified in Para 4.2 cover all such carbonated beverages containing carbon dioxide, irrespective of carbon dioxide being added as a preservative, additive, etc.
• Exclusion has been provided in the said goods in the entry at S number 48 of Schedule-II of notification number. 1/2017-Central Tax (Rate), vide notification No. 12/2022-Central Tax (Rate), dated 30.12.2022.

GST Applicability on Snack pellets manufactured through an extrusion process (such as ‘fryums’)

Such items shall be classified under tariff item 1905 90 30, covering goods with the description ‘Extruded or expanded products, savoury or salted’, attracting GST @ 18% vide S. No. 16 of Schle-III of notification Number. 1/2017- Central Tax (Rate), 

Compensation cess Applicability on Sports Utility Vehicles (SUVs)

Clarification was sought about the specifications of motor vehicles that attract compensation cess @ 22% vide entry at S. Number 52B of notification number 01/2017 Compensation Cess (Rate), wherein it is classified that Compensation Cess @ 22% is applicable on Motor vehicles, falling under heading 8703, that satisfies all four specifications, these are popularly known as SUVs; the engine capacity exceeding 1,500 ccs; the length exceeding 4,000 mm; and the ground clearance is 170 mm and above and such classification is only applicable for SUVs.

IGST rate Applicability on goods specified under notification No. 3/2017- Integrated Tax (Rate)

• There have been doubts pertaining to the applicable IGST rate on goods provided in the list in notification No. 3/2017-Integrated Tax (Rate) on the 28th of June 2017. Circular No. 189/01/2023-GST.
• Based on the recommendation of the 47th GST Council Meeting held in June 2022, there has been an increase of 5% – 12% on goods falling under any Chapter mentioned in the list provided in the notification No. 3/2017-Integrated Tax (Rate), dated 28.06.2017 when imported for the specified reason (like Petroleum operations/Coal bed methane operations) and on the basis of relevant conditions provided in the said notification. 
• However, some goods specified in the list of notification No. 3/2017-Integrated Tax (Rate), dated 28.06.2017, would also be eligible for a lower schedule rate of 5% by virtue of their entry in Schedule I of notification No. 1/2017-Integrated Tax (Rate), issued on the same date. 
• Accordingly, the board clarified that goods specified in the list provided in notification No. 3/2017-Integrated Tax (Rate), which are eligible for an IGST@ 12% as per the said notification, are also eligible for the benefit of the lower rate as per Schl. I of the notification number 1/2017-Integrated Tax (Rate), or any other notification on IGST rate notification, the importer could claim the benefit of the lower rate.

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Conclusion

Any difficulty being faced in the implementation of the said circular can be brought to the notice of the board. The circular provides the much-needed clarification regarding the GST rates and the classification of goods mentioned thereto as per the recommendations of the 48th GST Council meeting, which can simplify the GST filing process for individuals as well as entities. 

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