GST Council Recommends Amendments In Rules Relating To IGST Refunds On Exports & Pilot B2C E-Invoicing

Considering the difficulty being faced by the exporters due to restriction in respect of refund on exports, the 54th GST Council Meeting as a trade facilitation measure, recommended omission of Rule 96(10), rule 89(4A) & rule 89(4B) from CGST Rules, 2017 prospectively, where benefit of the specified concessional/ exemption notifications is availed on the inputs.

The Council further clarified that in respect of reassessments through the jurisdictional Customs authorities, “the IGST paid on exports, refunded to the said exporter shall not be considered to be in contravention of provisions of sub-rule (10) of rule 96 of CGST Rules”.

Additionally, the Council imposed restrictions on refund via Rule 96(10), rule 89(4A) & rule 89(4B) of CGST Rules, 2017.

At the same time, the Council recommended Nov 01, 2024 as the date for enforcement of Section 128A in CGST Act, 2017 dealing with 'Waiver of interest or penalty or both relating to demands raised u/s 73, for certain tax-periods'.

Going further, the Council recommended issuance of a Circular to clarify the procedure and various issues related to implementation of newly inserted section 16 (5) and (6) of the CGST Act.

The Council also clarified that past demands will be regularized on 'as is where is' basis for import of service by branch office, affiliation services, research and development services, transport of passengers by helicopters, film distribution, application fees for providing electricity connection, rental charges against electricity meter and others.

On composite supply of services, the Council clarified that “PLC is naturally bundled with it and are eligible for same tax treatment as the main supply that is, construction service” and “ancillary/intermediate services are provided by GTA, like loading /unloading, packing/ unpacking, will not be treated as composite supply of transport of goods”.

Talking about Invoice Management System, the Council clarified that taxpayers would be given the opportunity to declare their opening balance for these ledgers by Oct 31, 2024.

Detailed clarification by GST Council over measures for facilitation of trade:

1. The Council recommended insertion of rule 164 in CGST Rules, 2017, along with certain Forms, providing for the procedure and conditions for availment of benefit of waiver of interest or penalty or both, relating to tax demands u/s 73 of CGST Act, pertaining to FYs 2017-18, 2018-19 and 2019-20, as per section 128A of CGST Act. The Council also recommended to notify u/s 128A(1) of CGST Act, Mar 31, 2025 as the date on or before which the payment of tax may be made by the registered persons, to avail the said benefit as per section 128A of the CGST Act.

2. The Council recommended that a special procedure for rectification of orders may be notified u/s 148 of the CGST Act, to be followed by the class of taxable persons, against whom any order u/s 73 or section 74 or section 107 or section 108 of the CGST Act has been issued confirming demand for wrong availment of input tax credit on account of contravention of provisions of section 16(4) of the CGST Act, but where such input tax credit is now available as per the provisions of section 16(5) of the CGST Act, and where appeal against the said order has not been filed.

3. The Council recommended to clarify that where the inputs were initially imported without payment of integrated tax and compensation cess by availing benefits under Notification No. 78/2017-Customs dated Oct 13, 2017 or Notification No. 79/2017-Customs dated Oct 13, 2017, but IGST and compensation cess on such imported inputs are subsequently paid, along with applicable interest, and the Bill of Entry in respect of the import of the said inputs is got reassessed through the jurisdictional Customs authorities to this effect, then the IGST paid on exports, refunded to the said exporter shall not be considered to be in contravention of provisions of sub-rule (10) of rule 96 of CGST Rules.

Further, considering the difficulty being faced by the exporters due to restriction in respect of refund on exports, imposed vide rule 96(10), rule 89(4A) & rule 89(4B) of CGST Rules, 2017, in cases where benefit of the specified concessional/ exemption notifications is availed on the inputs, the Council recommended to prospectively omit rule 96(10), rule 89(4A) & rule 89(4B) from CGST Rules, 2017. This will simplify and expedite the procedure for refunds in respect of such exports.

The above-mentioned recommendations will be notified along with corresponding clarifications by CBIC.

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