GST WEEKLY UPDATE :07/2024-25 (19.05.2024) By CA Vipul khandhar

1. Information from manufacturers of Pan Masala and Tobacco taxpayers:

Government had issued a notification to seek information from taxpayers dealing in the goods mentioned therein vide Notification No. 04/2024 – Central Tax dated 05-01-2024. Two forms have been notified vide this notification namely GST SRM-I and GST SRM-II. The former pertains to registration and disposal of machines while the later asks information on inputs and outputs during a month.

To begin with, facility to register the machines have been made available on the GST Portal to file the information in Form GST SRM-I. All taxpayers dealing in the items mentioned in the said notification may use the facility to file the information about machines. Form GST SRM-II will also be made available on the portal shortly.

To check evasion, the GST portal has developed a form for manufacturers of Pan Masala and Tobacco taxpayers to register their machines. The same form will also be used to inform about the disposal of the machine. Another form will soon be notified to give information on inputs and outputs during a month.

Based on the recommendation of the GST Council, the Government issued a notification in January to seek information from taxpayers dealing in the goods such as pan masala and tobacco. Accordingly, two forms- GST SRM-I and GST SRM-II — were notified. The former pertains to the registration and disposal of machines, while the latter asks for information on inputs and outputs during a month. Earlier, the system was to come into effect on April 1, but it was later deferred to May 15.

“To begin with, the facility to register the machines have been made available on the GST Portal to file the information in Form GST SRM-I. All taxpayers dealing in the items mentioned in the said notification may use the facility to file the information about machines. Form GST SRM-II will also be made available on the portal shortly,” a communication from the GST portal said.

The Finance Act 2024 has amended the GST law to say that manufacturers of pan masala, gutka and similar tobacco products will have to pay a penalty of up to ₹1 lakh, if they fail to register their packing machinery with the GST authorities. Meanwhile, the penalty provision has not been notified.

The new procedure will apply to manufacturers of pan-masala, unmanufactured tobacco (without lime tube) with or without brand name, ‘Hookah’ or ‘gudaku’ tobacco bearing or not bearing a brand name, smoking mixtures for pipes and cigarettes, chewing tobacco (without lime tube), filter khaini, jarda-scented tobacco, snuff and branded or unbranded ‘Gutkha’, etc.

All registered persons engaged in manufacturing mentioned goods will be required to furnish the details of packing machines being used for filling and packing packages in within 30 days of the new norms coming into effect on May 15, 2024. The details of any additional filling and packing machine being installed at the registered place of business must be given within 24 hours of such installation.

The registered person shall submit a special statement for each month on or before the tenth day of the month succeeding such month. For example, returns for June are to be filed by July 10. The notification clarified that the here “brand name” means brand name or trade name, whether registered or not. It includes a name or a mark, such as a symbol, monogram, label, signature or invented word, or writing about such specified goods.

The special procedure is based on suggestions given by a Group of Ministers (GoM). The group said that tax evasion in tobacco products is an internationally common practice and emphasized that alternate systematic enforcement and administrative mechanisms must be devised to curb evasion and enhance compliance.

Accordingly, it was suggested that a track-and-trace method must be applied. It is an internationally accepted practice used to curb illicit trade in the tobacco sector with electronic means. Besides this, it was also suggested that manufacturers of tobacco products register each machine and disclose the make, year of production, number of tracks. and capacity of the machine.

2. GST Portal Update: Track Application Status Now Shows Physical Verification Markings as per GSTN’s Advisory dated February 28, 2024, GST PORTAL UPDATE:

 The ‘Track Application Status’ tab on the GST Portal now reflects whether a New Registration Application has been marked for Physical Verification. 

3. Madhya Pradesh GST Rules Amended to Require Electricity Bill for Business Registration

The Madhya Pradesh GST Department issued Notification No. CT-8-0004-2024-Sec-1-V-(CT)(11) dated May 13, 2024, amending the Madhya Pradesh GST Rules, 2017. Effective from June 1, 2024, these amendments require electricity bill details to be included in FORM GST REG-01 under serial number 24. Additionally, for proof of the principal place of business, a copy of the electricity bill must be uploaded as specified in the newly added serial number 6 in the “List of Documents to be uploaded.”

In exercise of the powers conferred by Section 164 of the Madhya Pradesh Goods and Services Tax Act, 2017 (19 of 2017), the State Government on the recommendation of the Council, hereby makes further amendments in the Madhya Pradesh Goods and Services Tax Rules, 2017, namely:

AMENDMENTS

In FORM GST REG-01, –

against serial number 24, for the words “(a) Field 1” the following shall be substituted, namely: –

“(a) Electricity Bill details

 (ii) in the Table appended to “List of Documents to be uploaded”, after Serial No. 5, following shall be added, namely: –

“6. State Specific Information: –

For proof of Principal Place of Business, copy of Electricity Bill.”

This notification shall come into force from June 01, 2024.

Registration process has 5 key sections: 1) Role Selection 2) GSTIN Details Verification 3) User Details Verification 4) Mobile and Email Verification 5) Role Registration Form Submission.

3. AAR & Important Judgements:

(i) CAAR On Classification of Whole/Split/Cut Roasted Areca Nut:

(Applicant – R V International)

In the case of M/s R V International, the issue at hand was the classification of roasted Areca nuts under the Customs Tariff Act, 1975. The applicant sought clarification on whether roasted Areca nuts should be classified under a particular category. The ruling provided a detailed analysis based on the legal framework and definitions of relevant terms.

The ruling pointed out the distinction between processes such as drying and roasting. While drying involves moisture removal, roasting entails severe heat treatment, resulting in fundamental chemical and physical changes in the structure of the product. The analysis referenced legal precedents and common trade parlance to elucidate these differences.
Chapter 20 of the Tariff, which covers preparations of vegetables, fruits, nuts, or other plant parts, was considered. It was noted that roasted nuts fall under this chapter, as they are prepared by processes not specified in Chapters 7, 8, or 11. Specifically, heading 2008 encompasses roasted nuts and seeds, including those dry-roasted, oil-roasted, or fat-roasted.

The ruling also highlighted the importance of the Harmonized System of Nomenclature (HSN) Explanatory Notes in determining classification. Previous judgments by the Supreme Court and High Courts were cited to support the classification of roasted nuts under Chapter 20.
Ultimately, the ruling concluded that roasted Areca nuts should be classified under Customs Tariff Heading 2008, specifically under CTI 2008 19 20 ‘Other roasted nuts & seeds’ of Chapter 20 of the Customs Tariff Act, 1975. This decision was based on the analysis of processes involved, legal precedents, and the guidance provided by the HSN Explanatory Notes.

Disclaimer:

This publication contains information for general guidance only. It is not intended to address the circumstances of any particular individual or entity. Although the best of endeavour has been made to provide the provisions in a simpler and accurate form, there is no substitute to detailed research with regard to the specific situation of a particular individual or entity. We do not accept any responsibility for loss incurred by any person for acting or refraining to act as a result of any matter in this publication.

(Author is a well known Chartered Accountant practicing at Ahmedabad)