The Central Board of Indirect Taxes and Customs (CBIC) has issued clarifications regarding GST rates, classification of certain goods and resolution of doubts of past periods on “as is” basis. These items include:
i) Un-fried or uncooked snack pellets made through the extrusion process.
ii) Fish Soluble Paste.
iii) Desiccated coconut.
iv) Biomass briquettes.
v) Imitation zari thread or yarn known by any name in trade.
vi) Supply of raw cotton by agriculturists to cooperatives.
vii) Plates and cups made from areca leaves.
viii) Goods falling under HSN (Harmonized System of Nomenclature) heading 9021.
CBIC GST Circular 200/12/2023 dated 01/08/2023: Clarifications on GST Rates and Classification of Certain Goods and Regularisation of Issues on “as is” basis
These clarifications have been issued by the CBIC based on the recommendations of the GST Council during its 50th meeting held on 11th July 2023. The detailed explanations are as under:
1. Revised GST Applicability on Un-Fried or Un-Cooked Snack Pellets Manufactured through Extrusion
The GST applicability on un-fried or un-cooked snack pellets, made through the process of extrusion, has been clarified as follows:
i) In the 48th meeting of the GST Council, it was decided that snack pellets, like ‘fryums’, made through extrusion are classified under tariff item 1905 90 30. This item covers goods described as ‘Extruded or expanded products, savoury or salted,’ and they are subject to an 18% GST rate according to item 16 of Schedule-III of Central Tax Rate Notification 1/2017, dated 28th June 2017.
ii) However, based on the recommendation of the GST Council in the 50th meeting, the supply of uncooked/un-fried extruded snack pellets (regardless of their name) falling under CTH 1905 will be subject to a reduced GST rate of 5%. This change will be effective from 27th July 2023 and is listed under item 99B of Schedule I of Central Tax Rate Notification 1/2017, dated 28th June 2017. Snack pellets in a ready-to-eat form will continue to attract the regular 18% GST under item 16 of Schedule III of the same notification.
iii) To address the previous period’s doubts regarding the applicable GST rate on un-fried or un-cooked snack pellets manufactured through extrusion, the issue until 27th July 2023 will be resolved based on the existing situation (“as is” basis).
2. GST Rate on Fish Soluble Paste:
Fish soluble paste was initially taxed at 18% under item 453 of Schedule III of Central Tax Rate Notification 1/2017, dated 28th June 2017. However, following a recommendation from the GST Council, the tax rate on fish soluble paste, classified under CTH 2309, has been reduced to 5%. This reduced rate will be effective from 27th July 2023.
To address any confusion regarding the GST rate on fish soluble paste before 27th July 2023, the issue is now being regularized on an “as is” basis, implying that the past period’s tax treatment will be considered correct without any changes.
3. Desiccated Coconut GST Rate Issue Regularisation
Regarding desiccated coconut and its GST rate applicability (under CTH 0801), there were genuine interpretational issues from 01.07.2017 to 27.07.2017. To address this, it has been decided to regularize the matter for this past period on “as is” basis as per GST Council recommendation.
4. Biomass Briquettes GST Rate Issue Regularization:
To address the interpretational issues related to the GST rate applicability on Biomass briquettes for the period from 01.07.2017 to 12.10.2017, it has been decided by the CBIC to resolve/regularize the matter on “as is” basis during that period, as recommended by the GST Council.
5. Supply of raw cotton by agriculturist to cooperatives:
Supply of raw cotton by agriculturists to cooperatives is considered a taxable supply according to the recommendation of the GST Council. If the cooperatives are registered persons, they need to pay 5% GST on a reverse charge basis, as per Central Tax Rate Ntification 43/2017 dated 14th November 2017.
To address previous uncertainties on this matter, any issues for past periods before this clarification are now regularized on an “as is basis.”
6. GST Rate Issue regarding Imitation Zari thread or yarn
The GST rates for imitation Zari thread or yarn have been revised to ensure clarity and uniformity in taxation. Initially, at the 15th Council meeting, embroidery or zari articles were taxed at 5%. Subsequently, it was clarified based on the 28th GST Council’s recommendation that imitation zari thread known as “Kasab” or any other name in trade would be taxed at 12% under tariff heading 5605.
However, in the 50th GST Council meeting, it was decided to reduce the GST rate on imitation zari thread or yarn to 5%. This reduced rate has been in effect since 27th July 2023, as indicated in item 218AA amended vide Central Tax Rate Notification 9/2023.
To address the confusion that arose in the trade about the applicable GST rate on these products before 27th July 2023, the issue has been regularized by tthe CBIC on an “as is” basis.
7. GST Rate Issues of Plates and Cups made from Areca Leaves Regularised
CBIC has regularised the issues relating to GST on plates and cups made from areca leaves on “as is basis” for the period prior to 01.10.2019, as recommended by the GST Council.
8. GST rate on goods falling under HSN 9021
GST rates on trauma, spine and arthroplasty implants falling under HSN heading 9021 were a subject of confusion before July 18, 2022. Prior to this date, there were two different rates for these goods under HSN heading 9021, leading to ambiguity.
To address this issue, the GST Council met in its 47th meeting and decided to simplify the tax structure. They prescribed a single uniform rate of 5% for these goods (except hearing aids, which continued to be exempt under item 142 of Central Tax Rate 2/2017 from July 18, 2022, onwards.
Further, in its 50th Meeting, the GST Council clarified that the GST rate for all goods falling under HSN heading 9021 would be 5%. To resolve the uncertainty for past periods, the issue is now regularized on an “as-is” basis. However, no refunds will be granted in cases where GST was already paid at the higher rate of 12%.
No Refunds
CBIC has further clarified that no refunds will be granted where GST has already been paid in excess in any of the above cases.
Conclusion
CBIC has taken significant decisions to provide clarity and resolve doubts regarding GST rates and classifications for various goods, which are based on the recommendations of the GST Council during its 50th meeting held on 11th July 2023.
Further, CBIC has taken measures to regularize issues from the past periods and ensure a fair and consistent tax structure for the above-mentioned goods. However, it is important to note that no refunds will be granted for cases where GST has already been paid at higher rates before these clarifications.
Overall, these clarifications aim to simplify the tax structure, address past uncertainties and promote ease of compliance for businesses and taxpayers.