The 52nd Goods and Services Tax (GST) Council convened on October 7, 2023, at Sushma Swaraj Bhawan in New Delhi. Union Finance Minister Smt. Nirmala Sitharaman chaired the meeting, which saw the participation of MoS (F) Shri Pankaj Chaudhary, the Revenue Secretary, Chairman of CBIC, and other high-ranking officials from both the Union Government and various states. This gathering occurred approximately two months after the 51st GST Council meeting, held on August 2, 2023.

Key Outcomes of the 52nd GST Council Meeting

Principal Recommendations by the GST Council

• An amnesty scheme for GST appeals was approved, extending the filing deadline until January 31, 2024, for orders issued up to March 2023. This scheme requires a 12.5% pre-deposit of the tax amount, with 2.5% payable in cash.
• Amendments to CGST Section 159 were recommended to ensure the automatic restoration of provisionally attached property after one year.
• It was clarified that personal guarantees provided by company directors to banks for corporate credit limits or loans would not be subject to GST.
• The taxable value for corporate guarantees between related entities, such as a holding company and its subsidiary, was set at 1% of the guarantee amount or the actual consideration, whichever is greater.
• The authority to tax Extra Neutral Alcohol (ENA) intended for human consumption (in alcoholic beverages) was transferred to the states.

Guidelines for the Constitution of GSTAT

• The age criteria for the President of the Goods and Services Tax Appellate Tribunal (GSTAT) were set at a minimum of 50 years and a maximum of 70 years, while members must be between 50 and 67 years old.
• Only advocates possessing a minimum of 10 years of experience are eligible for appointment as judicial members.

Key Issue Clarifications

• District Mineral Foundation Trusts (DMFTs) involved in mineral mining were deemed eligible for GST exemptions, consistent with other government entities.
• Job work services related to converting barley into malt will attract a 5% GST rate, categorized as "job work in relation to food and food products," instead of the previous 18%.
• Eighteen states have implemented amendments to impose a 28% GST on online gaming companies, effective October 1, 2023, along with corresponding GST Rules. However, thirteen states still need to officially notify these changes.

Revisions in GST Rates for Goods

• Millet flour in powdered form, when blended with other flours and containing at least 70% millet (under HS1901), will incur 0% GST when sold loose and 5% GST when sold pre-packaged and labeled.
• The GST rate on molasses was significantly reduced from 28% to 5%.
• Extra Neutral Alcohol (ENA) designated for industrial applications will be taxed at 18% GST, with a distinct HS code introduced for this purpose.
• Imitation zari thread or yarn, manufactured from metallized polyester or plastic film (HS 5605), will attract a 5% GST rate, without any input tax credit refund due to inversion.

Adjustments in GST Rates for Services

• GST was exempted for water supply, public health, and related services provided to government authorities, including composite services where these make up to 25% of the total service.
• A conditional IGST exemption was granted to foreign-flagged and foreign-going vessels that switch to coastal operations, provided they revert to foreign-going status within six months.
• Pure and composite services rendered to Central, State, or Union Territory governments and local authorities for Panchayat or Municipality functions were exempted from GST.
• Bus operator companies conducting sales via e-commerce platforms were excluded from CGST Section 9(5), enabling them to directly pay GST and claim Input Tax Credit (ITC).
• All services provided by Indian Railways will now fall under forward charge, allowing for Input Tax Credit (ITC) utilization against their GST liabilities.

Anticipations Prior to the 52nd GST Council Meeting

Formation of GST Appellate Tribunals

The GST Council had previously sanctioned the establishment of Goods and Services Tax Appellate Tribunals (GSTATs) across various states and Union Territories during its 50th meeting in July 2023. GSTATs serve as the second appellate forum under GST laws and represent the initial joint dispute resolution platform for Central and State authorities. All challenges to orders from Appellate Authorities under both CGST and SGST laws are heard by the GST Appellate Tribunal, which functions as a unified body for both Central and State GST Acts. This common platform is expected to foster consistency in GST dispute resolution and nationwide implementation. Prior to this, delays in establishing these tribunals had increased the caseload for Writ Courts, which often handled factual cases that GSTATs could have addressed. The GST Council put forth recommendations concerning the appointment criteria and service conditions for the President and members of these tribunals. By September 2023, the Finance Ministry progressed further by announcing the formation of 31 tribunals throughout the country. Operations for the first group of these tribunals were slated to commence between November 2023 and January 2024. Uttar Pradesh received the largest allocation with three tribunal benches, while Karnataka and Rajasthan were allotted two benches each. Maharashtra and Goa collectively share three benches, and Tamil Nadu and Puducherry jointly have two. Each of the northeastern states will host one tribunal bench. The 52nd GST Council meeting was expected to focus on the technical details surrounding the operationalization of these GST Appellate Tribunals.

Imposition of 28% GST on Online Gaming

During its 50th and 51st meetings, the GST Council determined a 28% GST rate for online gaming transactions, calculated on the face value. Rules for its enforcement were also established. Amendments to both Central and State GST laws were required. The 52nd meeting was anticipated to assess whether all states had enacted the necessary legal changes by October 1, 2023.

Further Anticipations

Additionally, the GST Council was expected to review the progress of various states and Union Territories in amending their state GST laws, incorporating past recommendations. These recommendations included removing the mandatory GST registration requirement for e-commerce sellers and updating e-way bill regulations for the intrastate movement of gold and precious stones (e-way bill for gold). There were also indications that the Council might consider lowering GST rates to zero for all millet-based products. Furthermore, a reduction in GST for health insurance, particularly for groups like senior citizens, from 18% to 12% was a potential topic. Although the GST Council Fitment Committee had previously rejected a proposal to reduce the GST rate on Electric Vehicles (EV) batteries from 18% to 5%, this issue was likely to be revisited. The Council was also anticipated to address the GST implications of personal guarantees provided by directors to banks for company credit lines or loans.