[Analysis] 54th GST Council Meeting | Comprehensive Updates and Recommendations for Simplifying GST Compliance

The 54th GST Council Meeting, chaired by Union Finance Minister Nirmala Sitharaman on 9th September 2024, has issued a series of recommendations to refine and simplify the GST framework, significantly easing the compliance burden across various sectors. Among the notable recommendations detailed in the release are new exemptions on services such as R&D and flying training courses, introduction of new reverse charge entries, and clarifications on contentious issues like Input Tax Credit eligibility and GST rates on specific goods like car seats and AC units for railways. Also included are procedural enhancements like the introduction of e-invoicing for B2C supplies and new functionalities on the GST Portal. These pivotal decisions span vital sectors including Indian Railways, e-commerce, and the insurance industry, with legal formalization to follow through the issuance of circulars, notifications, and legislative amendments.

Comments by Taxmann Advisory and Research Team

The GST Council’s 54th meeting was held in New Delhi on 9^th September, 2024 under the chairpersonship of the Union Finance & Corporate Affairs Minister Smt. Nirmala Sitharaman. The GST Council has, inter-alia made various recommendations relating to changes in GST tax rates, measures for facilitation of trade and clarifications on various contentious issues. Interestingly, no respite has been given to the ongoing disputes relating to online gaming under Section 11A of the CGST Act and the matter has been left open to be decided in the Courts. In-fact, the Revenue Secretary mentioned that Section 11A is to be applied in the rarest of the rare cases and not as a matter of routine practice. Also, the fate of the levy of compensation cess post March 2026 is left to be decided by GoM. Here is a quick note from Taxmann Indirect Tax Advisory and Research Team summarizing the major points for quick understanding of these recommendations.

Table of Contents

A. NEW EXEMPTIONS
1. Exemption on Supply of Research and Development Services
2. Exemption on Affiliation Services to Government School
3. Exemption on Import of Service by Branch Office of Foreign Airlines Company
4. Exemption on Application Fees for Electricity Connection, Rental Charges, etc.
5.  Exemption on Flying Training Courses Conducted by DGCA
B. NEW REVERSE CHARGE ENTRIES
6. RCM on Renting of Commercial Property by Unregistered to Registered Person
7. RCM on Supply of Metal Scrap by Unregistered to Registered Person
C. CLARIFICATIONS ON AMBIGUOUS ISSUES
8. ITC Eligibility on Demo Vehicles for Dealers of Vehicle Manufacturers
9. Treatment of Preferential Location Charges in Construction Services
10. Ancillary Services by GTA to be Treated as Composite Supply of Transport Services
11. Place of Supply of Specified Services Provided to Foreign Entities
12. IGST Refund Where Benefit Under Specified Export Incentive Schemes is Availed
13. Classification and GST Rate on Car Seats
14. Roof Mounted Package Unit (RMPU) AC Machines for Railways Liable to GST at 28%
D. NEW PROCEDURES, MECHANISM AND TECHNOLOGY ADOPTION
15. Mechanism for Implementation of Section 16(5) and Section 16(6)
16. Clarification on Section 128A and Procedures for Waiver of Interest & Penalty
17. Introduction of e-Invoicing Facility in Respect of B2C Supplies
18. Introduction of New Functionalities on GST Portal
E. GST RATE REDUCTIONS AND REGULARIZATIONS
19. GST @ 5% on Transportation of Passengers by Helicopter on Seat-share Basis
20. Reduction in Rate of Extruded or Expanded Products, Savoury or Salted
21. GST Rate on Major Cancer Drugs Reduced from 12% to 5%
22. Regularizing GST Liability for Film Distributor or Sub-Distributor
F. OTHER MISCELLANEOUS POINTS
23. Setting up of Ministerial Panels
24. Other Recommendations

A. NEW EXEMPTIONS

1. Exemption on Supply of Research and Development Services

• Recently, show cause notices were issued to top educational universities and institutions across the country by the Directorate General of GST Intelligence (‘DGGI’) for unpaid taxes on research grants. This has started a debate within the academic community, and many started calling it ‘tax terrorism’.
• In order to promote research and development activities, the Council has recommended to provide exemption on research and development services provided by:
  1. Government entity
  2. A research association, university, college (Private or public) or other institution notified under clauses (ii) or (iii) of section 35 of the Income Tax Act, 1961
• The GST exemption is recommended not only for government funds; but also for private funds. The exemption is available in all the cases whether a quid pro quo element exists or not.
• In respect of the past period, the demands are recommended to be regularised on ‘as is where is’ basis.

2. Exemption on Affiliation Services to Government School

• Affiliation by board means authorising the schools to undertake course of that Board and the students of the schools affiliated by the respective Boards can appear in the examination of that Board.
• On 17-06-2017, Circular No. 151/07/2021 – GST was issued which stated that GST at the rate of 18% applies to other services provided by such Boards, namely of providing accreditation to an institution or to a professional (accreditation fee or registration fee such as fee for FMGE screening test) so as to authorise them to provide their respective services. Now, in the 54th GST Council meeting, it has been recommended to clarify that such affiliation services provided by educational boards like CBSE are taxable.
• However, to reduce the litigation from 01-07-2017 to 17-06-2021 i.e. the date when circular was issued, it has been recommended to regularise the past issues on ‘as is where is basis’.
• Further, to reduce the cost for the education sector, the GST Council has recommended to exempt affiliation services provided by state/central educational boards, educational councils, and other similarly placed bodies where such services are provided to Government Schools. This Exemption will be applicable prospectively starting from the date of notification.
• The GST council has recommended to clarify that Affiliation services provided by universities to constituent colleges will continue to attract 18% GST, with no exemption for such services provided to education institutions.

3. Exemption on Import of Service by Branch Office of Foreign Airlines Company

• The Council has recommended to exempt the import of services by an establishment of a foreign airlines company from a related person or any of its establishment outside India, when made without consideration.
• Previously, the Directorate General of GST Intelligence issued notices to foreign airlines, demanding payment of thousands of crores in GST for services imported from their foreign counterparts. These notices were based on the premise that all services imported by Indian branches from their overseas counterparts were taxable under Schedule I, regardless of whether any consideration was involved or not. Such services may encompass aircraft leasing, ground staff and crew costs, jet fuel, and various maintenance or repair expenses.
• The Indian branch office is the recipient, while the head office located outside India is the supplier of services. According to the place of supply provisions, the branch office’s location in India is designated as the place of supply of service. Further, under the Reverse Charge Services notification, any services supplied by a person in a non-taxable territory to a person in a taxable territory are subject to GST on a reverse charge basis. Thus, the supply of all the services by foreign airlines company to its branches in India are liable to GST under reverse charge, irrespective of whether any consideration is charged or not.
• Notably, the proposed exemption has been provided specifically to the foreign airlines company and not to similar services when imported by taxpayers in other sectors.
• The council has also recommended to regularize the tax demands for past period on ‘as is where is’ basis.

4. Exemption on Application Fees for Electricity Connection, Rental Charges, etc.

• The Government vide Circular No. 34/8/2018-GST, dated 01-03-2018 had earlier clarified that ancillary or incidental services in the nature of application fees for releasing connection of electricity, rental charges against metering equipment, testing fee etc. are liable to GST.
• This clarification was challenged before the Gujarat High Court in the case of Torrent Power Ltd. v. Union of India[1]. The Court ruled the Circular is ultra-vires the provisions of section 8 of the CGST Act and to be stuck down. A similar decision was given by the Delhi High Court in the case of BSES Rajdhani Power Ltd.[2]wherein it was held that such services are bundled supplies and formed an integral part of supplies of distribution of electricity. Accordingly, the same should not be chargeable to GST.
• The Council has now recommended to provide GST exemption on supply of services such as application fees for providing electricity connection, rental charges against electricity meter, testing fees for meters/ transformers/capacitors, labour charges for shifting of meters/service lines, charges for duplicate bills etc. which are incidental, ancillary or integral to the supply of transmission and distribution of electricity by transmission and distribution utilities to their consumers, when provided as a composite supply.
• It is also recommended that the tax demands for the past period to be regularised on ‘as is where is’ basis.

5.  Exemption on Flying Training Courses Conducted by DGCA

• The Council has recommended to clarify by way of a circular that the approved flying training courses conducted by the DGCA approved Flying Training Organizations (FTOs) are exempt from the levy of GST.
• This recommendation will bring respite to ongoing litigations due to contradictory advance rulings by the States of Maharashtra and Uttar Pradesh. The Maharashtra AAR in the case of National Flying Training Institute (P.) Ltd.[3] has held that the supply of ‘Flying Training Services’ to trainees for completion of the approved course for Commercial Pilot License (Aeroplanes) is exempt from GST under Serial no. 66 of Notification No. 12/ 2017- Central Tax (Rate), dated 28-6-2017.
• Whereas, the Uttar Pradesh AAR in the case of CAE Simulation Training (P.) Ltd.[4] has held that training services to commercial pilots in accordance with the training curriculum approved by DGCA for obtaining extension of aircraft type rating on their existing licenses is liable to GST. This ruling was later on affirmed by the Appellate Authority.
• The proposed recommendation to clarify non-levy of GST is likely to settle these disputes.

B. NEW REVERSE CHARGE ENTRIES

6. RCM on Renting of Commercial Property by Unregistered to Registered Person

• The Council has recommended to provide levy of GST under Reverse Charge Mechanism (‘RCM’) on renting of commercial property by an unregistered person to a registered person. This change will bring taxability of renting of commercial property at par with the tax treatment on renting of residential property which is already liable to GST under the RCM.
• This change is likely to bring ease in compliances for the unregistered service provider and prevent revenue leakage.

7. RCM on Supply of Metal Scrap by Unregistered to Registered Person

• The Council has recommended to levy GST on supply of metal scrap by unregistered person to a registered person under RCM.
• The supplier is liable to seek GST registration as and when it crosses the threshold limit.
• As a background, metal scrap is used as a raw material by manufacturers. For instance, blended metal scrap is used by stainless steel manufacturers for manufacture of stainless steel products. For such purpose, different grades of metal scrap are sourced from various dealers, both from organized and unorganized sectors.
• The All India Induction Furnaces Association (AIIFA) has been representing that industry is under scrutiny due to fraudulent input credit claims by scrap dealers from the unorganised sectors.
• The proposal to levy GST under the RCM would help to resolve the issue of fraudulent input tax credit claims by scrap dealers.
• Also, it has been proposed to provide for TDS of 2% to be applicable on supply of metal scrap by registered person in case of B2B supplies.

C. CLARIFICATIONS ON AMBIGUOUS ISSUES

8. ITC Eligibility on Demo Vehicles for Dealers of Vehicle Manufacturers

• The availability of ITC on motor vehicles purchased by the car dealers for demonstration purposes is a contentious issue.
• Section 17(5)(a) of the CGST Act restricts ITC in respect of motor vehicles used for transportation of passengers having an approved seating capacity of not more than 13 persons (including the driver). The restriction does not apply in cases where such services are used for making ‘further supply of such motor vehicles’.
• Demo vehicles are neither ‘held for sale’ nor ‘put to regular use’ and are used for test drive or giving the information about the features of the car to the prospective customers. The vehicles are generally sold when the new model of the vehicle is launched or when such ‘demo car’ becomes outdated.
• The Kerala AAR[5] and Goa AAR[6] has held that as these cars are used in the further supply of motor vehicles, the ITC of GST paid at the time of its purchase is available as ITC to the dealer.
• However, the Madhya Pradesh AAAR has held[7] that the appellant is not entitled to avail ITC on such inward supply of demo vehicles as such vehicles do not qualify under the exceptions and upheld the ruling of AAR that disallowed the ITC on demo cars. In the given case, the AAR held[8] that the subsequent sale of Demo Vehicle after 1 or 2 years cannot be categorized as intended for the further supply of such vehicles. The subsequent sale of the demo vehicle on which depreciation has been charged is to be treated as a sale of a used second-hand vehicle, and not the sale of a new vehicle and hence ITC of the GST paid at the time of its purchase is not available to the dealer.
• This ongoing controversy is expected to be resolved by the CBIC with this clarification. The final circular on this matter is awaited, which will determine whether the Council will allow ITC eligibility for demo vehicles or not. Although various favourable Advance Rulings suggests that the Circular should be in the favour of the industry.

9.  Treatment of Preferential Location Charges in Construction Services

• The GST Council has recommended to clarify that location charges or Preferential Location Charges (‘PLC’) paid along with the consideration for the construction services of residential/commercial/industrial complex before the issuance of a completion certificate forms part of the composite supply of construction service. In this composite supply, construction service is the principal supply and PLC is naturally bundled with it, thereby eligible for same tax treatment as the main supply i.e. construction service.
• PLC refers to additional charges collected by builders from buyers for providing preferred locations like park facing, corner, first floor, top floor, vaastu compliant flats, etc.
• Currently, there is an ambiguity on whether PLC should be taxed as a part of the construction service supply or as an independent supply of service, which has led to disputes on the availability of the abatement of 1/3rd value of land.
• There were contrary rulings on the matter. Some are in favour[9] of treating PLC as a composite supply, considering it as a part and parcel of the main service and therefore eligible for the 1/3rd value of land abatement. Others, however, argue that PLC is a separate service with no association with the land, and thus, no benefit of land abatement should be provided[10].
• The proposed clarification is likely to settle the ongoing disputes on this matter.

10. Ancillary Services by GTA to be Treated as Composite Supply of Transport Services

• The Council has recommended to clarify that where a Goods Transport Agency (‘GTA’), who issues a consignment note, along with the services of transport, provides ancillary/intermediate services like loading/unloading, packing/unpacking, transshipment, temporary warehousing etc., such ancillary services would be treated as composite supply of service where the principle supply is a GTA service.
• Also, where such services are not provided in the course of transportation of goods and invoiced separately, then the Council has recommended to clarify that these services will not be treated as composite supply of transportation of goods.
• This clarification would significantly settle the ongoing litigation on tax treatment of these services as composite supply vs independent supply of service.

11. Place of Supply of Specified Services Provided to Foreign Entities

• Clarification on the place of supply of advertising services provided by Indian advertising companies to foreign entities.
• Clarification on place of supply of data hosting services provided by service providers located in India to cloud computing service providers located outside India.
• The GST Council has recommended to clarify that in both these cases, the place of supply would be the location of the service recipient which is located outside India. Accordingly, these services would qualify as export of services subject to the fulfilment of other conditions as prescribed.

12. IGST Refund Where Benefit Under Specified Export Incentive Schemes is Availed

• As per Rule 96(10) of the CGST Rules, exporters claiming refund of IGST paid on exports (under with payment of IGST mode) must not have received the supplies on which the benefit of the specified export incentive schemes[11] such as EOU, Advance Authorization, EPCG, etc. have been availed.
• In simpler terms, mode of IGST refund with payment of tax is restricted where the exporter has initially claimed the benefit of specified export incentive schemes.
• For instance, under the Customs law and Foreign Trade Policy, an Advance Authorization holder[12] may import goods into India without the payment of Basic Customs Duty (BCD), IGST, etc. As per the aforesaid restriction under Rule 96(10), if the Advance Authorization holder exports goods with payment of IGST, they cannot claim a refund on that IGST if they have already claimed exemptions on the inputs at the time of import.
• However, explanation to Rule 96(10) provides that if the exemption benefit is only limited to the BCD component and the taxpayer has paid the applicable IGST and Compensation Cess, they are eligible for an IGST refund on exports under with payment of tax mode.
• The GST Council has now recommended that if inputs were initially imported without paying IGST or Compensation Cess under the schemes like EOU, Advance Authorization, EPCG, etc., but these duties were subsequently paid (along with interest) and the Bill of Entry is reassessed by the Customs authorities, then the IGST refund on exports will not be considered as a violation of Rule 96(10).
• Additionally, a similar restriction exists under Rule 89(4A) and (4B) of the CGST Rules for refund of IGST on zero-rated supplies made under Bond/LUT (without payment of tax mode). Here, refunds are only allowed for ‘other inputs or input services’ on which exemption benefit has not been claimed. This also impacts the calculation of ‘Net ITC’ and ‘turnover’ in the formula used to determine the refund amount.
• Now, the Council has also recommended removing these restrictions under Rule 96(10), Rule 89(4A), and Rule 89(4B) of the CGST Rules so as to simplify and expedite refund claims.

13. Classification and GST Rate on Car Seats

• The Council has recommended to clarify by way of a circular that car seats are classifiable under 9401 and attract a GST rate of 18%.
• Further, it is proposed to increase the GST rate on car seats classifiable under 9401 from 18% to 28%. This uniform rate of 28% will be applicable prospectively for car seats of motor cars in order to bring parity with seats of motorcycles which already attract a GST rate of 28%.
• The classification of car seats, its components and accessories such as car seat covers has been a contentious issue. In this regard, the relevant entries under the Customs Tariff Act, 1975 and GST Rate Notification have been reproduced below:

• There are various rulings which have classified car seats under the Heading 9401, subjecting them to 18% GST rate[13]. While there are some contrary rulings wherein car seat and covers are categorised as ‘motor vehicle accessories’ falling under HSN 8708 and liable to 28% GST rate[14].
• In contrast, the parts and accessories of motorcycle/two-wheelers have been classified under Heading 8714, which is also supported by relevant advance rulings[15].
• In conclusion, prescribing 28% GST rate for car seats, similar to the rate for motorcycle seats, will bring uniformity in the GST rates of seat, components and accessories for both cars and motorcycles.

14. Roof Mounted Package Unit (RMPU) AC Machines for Railways Liable to GST at 28%

• The air conditioning machines and other items falling under heading 8415 are liable to GST at 28%.
• The classification of goods basis their independent tariff classification or basis the end use test (as upheld by the larger bench of SC[16] in context of railways parts) has been a matter of intense judicial scrutiny for various similar products. Recently, the AAAR by the State of Punjab[17] has held that Roof Mounted Package Unit (RMPU) air conditioning machines for railways should fall under HSN 8415 and liable to GST at 28% and not as parts of railway or tramway locomotives or rolling stock.
• The Council has recommended to clarify that Roof Mounted Package Unit (‘RMPU’) air conditioning machines for railways will be classified under HSN 8415, attracting a GST rate of 28% which is likely to settle the ongoing disputes.

D. NEW PROCEDURES, MECHANISM AND TECHNOLOGY ADOPTION

15. Mechanism for Implementation of Section 16(5) and Section 16(6)

• Based on the recommendations of the 53^rd GST Council meeting, sub-sections 5 and 6 were inserted in Section 16 of the CGST Act vide Finance (No. 2) Act, 2024 which provides as under:
  1. Allowing Input Tax Credit (‘ITC’) for FY 2017-18 to FY 2020-21 where the same is claimed in any return in Form GSTR-3B filed upto 30-11-2021;
  2. Providing 30-days time limit for claiming ITC where the registration of the person was cancelled before the lapse of time limit for availing ITC under Section 16(4) and such cancellation was revoked after the lapse of time for claiming of ITC.

These newly introduced sub-sections aimed at reducing the litigation and providing a fair chance to the registered person to avail the legitimate ITC. It may be noted that these sub-section would be applicable retrospectively w.e.f. 01-07-2024. However, it was also provided in Section 150 of the Finance Act (No. 2), 2024 that where tax has already been paid or ITC has already been reversed, no refund would be available for such tax paid or ITC reversed.

• Now, the GST Council, in its 54^th meeting, has recommended to notify a special procedure for rectification of orders confirming demand for wrong availment of ITC on account of contravention of provisions of section 16(4) of the CGST Act where appeal against such order has not been filed.
• It is further recommended to issue a circular to clarify the procedure and issues relating to the implementation of the said provisions of sub-section (5) and sub-section (6) of section 16 of the CGST Act.

16. Clarification on Section 128A and Procedures for Waiver of Interest & Penalty

• Based on the recommendations of 53^rd GST Council meeting, Section 128A was introduced in the Finance (No. 2) Act, 2024 to provide for waiver of interest and penalties for demand notices or orders issued under Section 73 of the CGST Act pertaining to any period from 01-07-2017 till 31-03-2020.
• However, the rules in this regard have not been prescribed yet. Now, the GST Council, in its 54^th meeting has recommended to insert Rule 164 to prescribe the mechanisms, conditions, and relevant forms to be used for availing the said waiver.
• The Council has recommended that the said section should be notified w.e.f. 01-11-2024. Hence, this date, once notified would be the start date for availing the benefit of Section 128A. Also, the Council has recommended that the last date for payment of tax to avail the benefit would be 31-03-2025.
• The Council has also recommended to issue a circular clarifying the conditions of availability of waiver of interest and penalty under Section 128A.

17. Introduction of e-Invoicing Facility in Respect of B2C Supplies

• The provision of e-invoicing is currently applicable on B2B invoices where the turnover exceeds Rs. 5 Crores in any of the financial years starting from 01-07-2017.
• Now, the Council has recommended to extend the similar e-invoicing requirement in case of B2C supplies. This requirement will be rolled out as a pilot project which will be implemented on a voluntary basis for selected sectors and states.
• This change is aimed at reducing revenue leakage and facilitate grant of GST refunds to foreign tourists in times to come.

18. Introduction of New Functionalities on GST Portal

• The CBIC has recently introduced new functionalities on the GSTN portal, including RCM ledger, ITC reclaim ledger and Invoice Management System (‘IMS’). The recommendations of the Council meeting suggest that the taxpayers would be given the opportunity to declare their opening balances in these ledgers by 31-10-2024.
• The RCM liability/ ITC statement was introduced via the GSTN advisory dated 23-08-2024 to ensure the correct reporting of RCM transactions. This statement will capture the RCM liability reported in Table 3 of GSTR-3B and the corresponding ITC claimed in Table 4 of GSTR-3B for the return period. The same will be made applicable from the tax period of August 2024.
• IMS is introduced via GSTN advisory dated 03-09-2024. The IMS will enable the taxpayers to accept, reject, or keep the invoices pending for the purpose of availing ITC. This optional facility is provided to reduce errors in claiming ITC and improve reconciliation.
• A new ledger, Electronic Credit and Re-claimed Statement was introduced on the GST portal via GSTN Advisory dated 31-08-2023. This statement assists the taxpayers in tracking ITC that has been reversed in Table 4B(2) and subsequently re-claimed in Table 4D(1) and 4A(5) for each return period, starting from August 2023. The GST portal will maintain a record of ITC reversal and re-claimed on a return period basis in statement, with a validation mechanism in GSTR-3B that will trigger a warning if excess ITC is re-claimed in Table 4D(1).
• It’s important to note that the GST law does not specifically provide any legal backing for the aforementioned functionalities. Specifically in the case of IMS, the GSTN advisory discusses that ITC can be accepted via IMS even after the 14th of the relevant month, which is the cut-off date for generating GSTR-2B. Based on such accepted ITC via IMS, eligible ITC as per GSTR-2B is to be recomputed manually. However, the law only allows for ITC availment on the basis of auto-generated GSTR-2B. Thus, there is a need for clarification or suitable amendment to the relevant CGST Rules to align this newly introduced functionality on the GSTN portal with the existing GST law.
• Considering 01-10-2024 as the implementation date, companies will have to revisit their compliance processes and gear up their systems to quickly adhere to this new requirement.

E. GST RATE REDUCTIONS AND REGULARIZATIONS

19. GST @ 5% on Transportation of Passengers by Helicopter on Seat-share Basis

• The transportation of passengers by air in economy class currently attracts a GST rate of 5%. However, there was a lack of clarity on whether transportation of passengers by helicopter on a seat-share basis would fall under this category and be subject to the 5% GST or 18%.
• The GST council has recommended to notify 5% GST rate for helicopter services on a seat-share basis. The Council, in press conference, has stated that it is recommended to insert a separate entry for the same. It is also recommended that the past cases will be regularized on ‘as is where is’ basis.
• It has also been clarified that 18% GST will continue to apply to the chartering of helicopters for exclusive use.

20. Reduction in Rate of Extruded or Expanded Products, Savoury or Salted

• Extruded or expanded food products are created by forcing a mixture through a die under high heat and pressure, resulting in a light, airy texture, with examples including puffed cereals, snack foods, pasta, and textured vegetable protein.
• The GST Council has recommended to reduce the GST rate on extruded or expanded products, savoury or salted falling under heading 1905 90 30 from 18% to 12%, with prospective effect.
• The above reduction in the GST rate will align the GST taxability on these items with that on namkeens, bhujia, mixture, chabena (pre-packaged and labelled) and similar edible preparations falling under heading 2106 90 which are currently taxable @ 12%.
• It has also been clarified that unfried or uncooked snack pellets, regardless of their name, manufactured through the process of extrusion will continue to attract a 5% GST.

21. GST Rate on Major Cancer Drugs Reduced from 12% to 5%

• The customs duties on three major cancer drugs, namely Trastuzumab Deruxtecan, Osimertinib, and Durvalumab were exempted in the Union Budget 2024 to reduce the cost of cancer treatment.
• The GST Council has recommended to reduce the GST rate on these drugs from 12% to 5% to lower the cost of cancer treatment further.

22. Regularizing GST Liability for Film Distributor or Sub-Distributor

• The Council has recommended to regularise the GST liability for the past period prior to 01-10-2021 on ‘as is where is’ basis, where the film distributor or sub-distributor acts on a principal basis to acquire and distribute films.
• Notably, the GST Council in its 45th Meeting recommended to increase GST rate from 12% to 18% w.e.f. 01-10-2021 on licensing services/the right to broadcast and show original films, sound recordings, Radio and Television programmes to bring parity between distribution and licencing services.
• Earlier, the revenue was of the view that services rendered by the distributor appears to be more appropriately classifiable under SAC 999614, which attracts 18% GST rate but the industry was classifying it under SAC 9973 which attracts 12% GST.

F. OTHER MISCELLANEOUS POINTS

23. Setting up of Ministerial Panels

The Council has set-up ministerial panels to decide on:

• GST on life and health insurance – Levy of GST on life and health insurance premiums has been a topic of debate for a long time now. Representations have been made to provide GST exemption on various insurance schemes. The GST Council has recommended to set up a committee of Group of Ministers (GoM) to thoroughly review issues concerning the levy of GST on the life and health insurance schemes including term insurance and group insurance. The GoM is likely to submit its report by the end of October 2024. The review aims to address taxation complexities in insurance sector providing a more rationalised GST structure.
• Fate of compensation cess post March 2026 – Levy of compensation cess was earlier extended till March 2026 to pay back GST loans post which the levy of cess cannot be continued. The Council has recommended to set-up a GoM to decide on its levy once the GST loan is paid back.
• Retrieval of negative IGST balances from States where excess payments have been made.
• Review of GST on real estate sector and rate rationalization has been deferred.

24. Other Recommendations

• TDS of 2% to be applicable on supply of metal scrap by registered person in B2B supply.
• Taxability of online money gaming, casinos and horse racing has been reviewed by GST Council but no changes have been proposed as of now.
• Council has clarified that Section 11A would be applied in the rarest of the rare cases and will not be applied as a matter of practice.
• Council has recommended amendments in the CGST Rules, 2017 (Fine print is awaited).

[1] [2019] 101 taxmann.com 303 (Gujarat)

[2] [2023] 157 taxmann.com 481 (Delhi)

[3] [2024] 165 taxmann.com 585 (AAR – MAHARASHTRA)

[4] [2023] 152 taxmann.com 648 (AAR- UTTAR PRADESH)

[5] A.M. Motors., In re [2018] 98 taxmann.com 157 (AAR – Kerala)

[6] Chowgule Industries (P.) Ltd. (2019) 107 taxmann.in 293 (AAR, Goa)

[7] Khatwani Sales And Services L.L.P. [2022] 141 taxmann.com 379 (AAAR – Madhya Pradesh)

[8] Khatwani Sales And Services L.L.P. [2021] 124 taxmann.com 149 (AAR – Madhya Pradesh)

[9] Logix Infrastructure Pvt Ltd. vs Commissioner of C. EX. & S.T., Noida, 2019 (25) G.S.T.L. 59 (Tri. – All.)

[10] Bengal Peerless Housing Development Company Ltd., In re, [2019] 110 taxmann.com 34 (AAAR-West Bengal)

[11] Notification No. 78/2017-Customs, dated 13-10-2017 or Notification No. 79/2017-Customs, dated 13-10-2017

[12] Notification No. 78/2017-Customs, dated 13-10-2017

[13] [2024] 160 taxmann.com 631 (AAR – Tamil Nadu)

[14] [2008] 2008 taxmann.com 245 (SC), [2021] 130 taxmann.com 231 (SC), [2024] 165 taxmann.com 479 (AAAR – Andhra Pradesh), [2024] 160 taxmann.com 612 (AAR – Andhra Pradesh), [2021] 127 taxmann.com 771 (AAR – Tamil Nadu)

[15] Lion Seat Cushions Private Limited [2024] 160 taxmann.com 699 (AAAR – Tamil Nadu) and Ruling No. 105/AAR/2023 dated 5-9-2023

[16] Westinghouse Saxby Farmer Ltd. v. CCE [(2021) 125 taxmann.com 243]

[17] Ess Ess Kay Engineering Co. (P.) Ltd [(2023) 149 taxmann.com 90]