The GST council, at its 57th meeting, has recommended a series of reforms, primarily covering registration, returns, refund and adjudication; clarifications regarding applicability of Goods and Services Tax (GST) on supply of certain goods and services; and other measures for trade facilitation and streamlining compliances in GST. During the meeting, the council has recommended removal of arrest provisions under GST by omission of section 69 of CGST Act, 2017 and the monetary threshold for prosecution to be raised from Rs 1 crore to Rs 5 crore. Further, it recommended reducing the general penalty from Rs 25,000 to Rs 10,000. Additionally, it has approved in-principle optional scheme for small consumer-facing businesses with turnover up to Rs 5 crore.
Moreover, the council has recommended measures for smoother movement of goods across states by making amendments in section 68, section 129 and section 130 of the CGST Act, 2017, so that a conveyance carrying goods can be intercepted only on specific intelligence and with the authorisation of an officer not below the rank of Joint Commissioner, inspection and further action for detention or seizure can be taken when either the supplier, or the recipient, is located or registered in the State where interception is being made, where no e-way bill has been generated, or the conveyance is not carrying any document to show the origin or destination of the goods, as the case may be, the goods can be inspected, detained or seized, irrespective of the jurisdiction and provision of confiscation of goods/conveyances under section 130 of CGST Act not applicable in respect of goods/conveyances in transit.
Besides, it has recommended simplifying GST registration for small sellers on e-commerce platforms by insertion of rule 14B in the CGST Rules, 2017, to provide for a simple mechanism for registration for small suppliers making supplies of goods through Electronic Commerce Operators (ECOs), in States/UTs, where they do not have physical presence, and where they intend to pass on ITC not more than Rs 2.5 lakh per month, excluding stock transfers between distinct persons, by declaring the warehouse of an ECO in that State/UT, as their Principal Place of Business (PPoB). To facilitate export of services, it recommended omission of sub-clause (v) of clause (6) of section 2 of the IGST Act, 2017, so as to remove the condition of supplier and recipient of services not being establishments of a distinct person, under Explanation 1 to section 8 of the IGST Act, 2017, for a supply of services to qualify as an ‘export of services’. This will facilitate refunds for Indian services providers in respect of services supplied to/through their foreign offices/branches and thus will promote export of services from India.
Other key reforms recommended by the GST council includes, wider eligibility for input tax credit and refunds, further simplification of registration and compliance processes, faster refunds to improve working capital for businesses, common standards for GST notices and proceedings and wider eligibility for input tax credit and refunds.
