Important Keywords: Circular No. 200/12/2023-GST, GST Rates on Certain Goods, GST Classification Circular 2023, Unfried Snack Pellets GST, Fish Soluble Paste GST, Desiccated Coconut GST, Biomass Briquettes GST, Imitation Zari Thread GST, Raw Cotton GST, Reverse Charge on Raw Cotton, Areca Leaf Plates GST, HSN 9021 GST Rate, Trauma Implants GST, GST Council 50th Meeting, CBIC Circular 200/12/2023, GST Compliance, GST Return Filing, GST Registration,
Words: 2461 Read time: 13 minutes.
Table of Contents
F. No. 190354/140/2023-TRU
Government of India
Ministry of Finance
Department of Revenue (Tax Research Unit)
*****
North Block, New Delhi
Dated the 1st August 2023
Circular No. 200/12/2023 - GST: Clarification Regarding GST Rates and Classification of Certain Goods Based on the Recommendations of the GST Council in its 50th Meeting Held on 11th July 2023
To,
The Principal Chief Commissioners/ Chief Commissioners/ Principal Commissioners/ Commissioners of Central Tax (All)
The Principal Directors General / Directors General (All)
Madam/ Sir,
Subject: Clarification regarding GST rates and classification of certain goods based on the recommendations of the GST Council in its 50th meeting held on 11th July, 2023–reg.
Based on the recommendations of the GST Council in its 50th meeting held on 11th July 2023, clarifications with reference to GST levy related to the following items are being issued through this circular:
- Un-fried or un-cooked snack pellets, by whatever name called, manufactured through process of extrusion.
- Fish Soluble Paste;
- Desiccated coconut;
- Biomass briquettes;
- Imitation zari thread or yarn known by any name in trade parlance;
- Supply of raw cotton by agriculturist to cooperatives;
- Plates, cups made from areca leaves
- Goods falling under HSN heading 9021
2. Applicability of GST on un-fried or un-cooked snack pellets, by whatever name called, manufactured through process of extrusion:
2.1 In the 48th meeting of the GST Council, it was clarified that the snack pellets (such as ‘fryums’), which are manufactured through the process of extrusion, are appropriately classifiable under tariff item 1905 90 30, which covers goods with description ‘Extruded or expanded products, Savoury or salted’, and thereby attract GST at the rate of 18% vide S. No. 16 of Schedule-III of notification no. 1/2017-Central Tax (Rate), dated the 28th June, 2017.
2.2 In view of the recommendation of the GST Council in the 50th meeting, supply of un- cooked/un-fried extruded snack pellets, by whatever name called, falling under CTH 1905 will attract GST rate of 5% vide S. No. 99B of Schedule I of notification no. 1/2017-Central Tax (Rate), dated the 28th of June 2017 with effect from 27th July,2023. Extruded snack pellets in ready- to-eat form will continue to attract 18% GST under S. No. 16 of Schedule III of notification no. 1/2017-Central Tax (Rate), dated the 28th of June 2017.
2.3 Further, in view of the prevailing genuine doubts regarding the applicability of GST rate on the un-fried or un-cooked snack pellets, by whatever name called, manufactured through process of extrusion, the issue for past period up to 27.7.2023 is hereby regularized on “as is” basis.
3. Applicability of GST on Fish Soluble Paste:
3.1 Fish soluble paste attracted 18% under the residual entry S No. 453 of Schedule III of notification no. 1/2017-Central Tax (Rate), dated the 28th of June 2017. As per recommendation of the GST Council, GST on fish soluble paste, falling under CTH 2309, has been reduced to 5%. Accordingly, the rate has been notified vide S. No. 108A with effect from 27th July,2023.
3.2 Further, in view of the prevailing genuine doubts regarding the applicability of GST rate on fish soluble paste, the issue for past period up to 27.7.2023 is hereby regularized on “as is” basis.
4. Desiccated coconut- Regularization of the issue for past period from 01.07.2017 up to and inclusive of 27.07.2017:
As per recommendation of the GST Council, in view of the prevailing genuine interpretational issues regarding the applicability of GST rate on the desiccated coconut, falling under CTH 0801, the issue for past period from 01.07.2017 up to and inclusive of 27.07.2017 is hereby regularized on “as is” basis.
5. Biomass briquettes- Regularization of the issue for past period from 01.07.2017 up to and inclusive of 12.10.2017:
As per recommendation of the GST Council, in view of the prevailing genuine interpretational issues regarding the applicability of GST rate on the Biomass briquettes, falling under any chapter, the issue for past period from 01.07.2017 up to and inclusive of 12.10.2017 is hereby regularized on “as is” basis.
6. Supply of raw cotton by agriculturist to cooperatives:
6.1 As per recommendation of the GST Council, it is hereby clarified that supply of raw cotton, including kala cotton, from agriculturists to cooperatives is a taxable supply and such supply of raw cotton by agriculturist to the cooperatives (being a registered person) attracts 5% GST on reverse charge basis under notification no. 43/2017-Central Tax (Rate) dated 14th November 2017.
6.2 In view of prevailing genuine doubts, the issue for the past periods prior to issue of this clarification is hereby regularized on “as is basis”.
7. GST rate on Imitation Zari thread or yarn known by any name in trade parlance:
7.1 In the 15th Council meeting, the Council agreed to tax embroidery or Zari articles i.e., Imi, Zari, Kasab, Saima, Dabke, Chumki, Gota, Sitara, Naqsi, kora, glass beads, Badla, Gizai at the rate of 5%. Based on the recommendation of the 28th GST Council, it was clarified that imitation Zari thread or yarn known as “Kasab” or by any other name in trade parlance, would attract a uniform GST rate of 12% under tariff heading 5605.
7.2 As per the recommendation of the GST Council in its 50th meeting, GST on imitation Zari thread or yarn known by any name in trade parlance has been reduced from 12% to 5%. Accordingly, the rate has been notified vide S. No. 218AA with effect from 27th July,2023.
7.2. In view of the confusion in the trade regarding the applicability of GST rate on these products, the issue for past period upto 27.7.2023 is hereby regularized on “as is” basis.
8. Plates, cups made from areca leaves
As per the recommendation of the GST Council, issues relating to GST on plates and cups made from areca leaves are hereby regularized on “as is basis” for the period prior to 01.10.2019.
9. GST rate on goods falling under HSN 9021
9.1 Representations have been received seeking clarification regarding the GST rates applicable on trauma, spine and arthroplasty implants falling under HSN heading 9021 for the period before 18.07.2022 stating that there are interpretational issues due to the duality of rates on similar items leading to ambiguity. The issue has arisen as prior to 18.07.2022 there existed two rates on the goods falling under HSN heading 9021 as per S. No. 257 of schedule I and S. No. 221 of schedule II of notification no. 01/2017-CT (Rate) dated 28.06.2017.
9.2 The issue was examined by GST Council in its 47th meeting and as per its recommendations, a single uniform rate of 5% was prescribed for such goods (except hearing aid, which continued to attract Nil under S.N. 142 of 02/2017-CT(Rate)) falling under HSN heading 9021 with effect from 18.07.2022.
9.3 As per recommendations of the GST council in its 50th Meeting, it is hereby clarified that the GST rate on all such goods falling under heading 9021 would attract a GST rate of 5% and in view of prevailing genuine doubts, the issue for the past periods is hereby regularized on “as is basis”. However, it is clarified that no refunds will be granted in cases where GST has already been paid at higher rate of 12%.
10. It is further clarified that no refunds will be granted where GST has already been paid in any of the above cases.
11. Difficulty if any, in the implementation of this circular may be brought to the notice of the Board.
Yours faithfully,
(Nitin Gupta)
Technical Officer
TRU-I
📚 Frequently Asked Questions (FAQs): Circular No. 200/12/2023 - GST
Q1. What is Circular No. 200/12/2023-GST?
Answer:
Circular No. 200/12/2023-GST clarifies the GST rates and classification of several goods based on the recommendations of the 50th GST Council Meeting held on 11 July 2023. It covers products such as un-fried snack pellets, fish soluble paste, desiccated coconut, biomass briquettes, imitation zari thread, raw cotton supplied by agriculturists, areca leaf products, and goods under HSN 9021. The circular also regularizes certain past disputes on an "as is" basis.
Q2. What GST rate applies to un-fried or un-cooked extruded snack pellets?
Answer:
With effect from 27 July 2023, un-fried or un-cooked extruded snack pellets falling under CTH 1905 attract 5% GST. However, ready-to-eat fried or cooked snack pellets continue to attract 18% GST.
In simple terms, the GST rate now depends on the stage of the product. Semi-finished snack pellets attract the lower rate, whereas ready-to-eat products continue to be taxed at the higher rate.
Q3. What is the GST rate on Fish Soluble Paste?
Answer:
The GST rate on Fish Soluble Paste falling under CTH 2309 has been reduced from 18% to 5%, effective from 27 July 2023.
Many businesses actually faced confusion because Fish Soluble Paste was earlier classified under the residual entry attracting 18% GST. The GST Council recommended a concessional rate of 5%, and the circular also regularizes the past period on an "as is" basis.
Q4. What clarification has been issued regarding desiccated coconut?
Answer:
The circular does not change the GST rate on desiccated coconut. Instead, it regularizes disputes relating to the GST rate applicable during the period from 1 July 2017 to 27 July 2017.
If you look at it practically, businesses that adopted different tax positions during that initial GST period will not face fresh disputes because the issue has been regularized on an "as is" basis.
Q5. How has CBIC clarified GST on biomass briquettes?
Answer:
CBIC has regularized GST issues relating to biomass briquettes for the period from 1 July 2017 to 12 October 2017 on an "as is" basis.
This clarification acknowledges that there were genuine interpretational issues during the initial phase of GST implementation. However, the circular does not provide for any refund where GST has already been paid.
Q6. Is GST applicable on the supply of raw cotton by an agriculturist to a cooperative society?
Answer:
Yes. The circular clarifies that supply of raw cotton, including kala cotton, by an agriculturist to a registered cooperative society attracts 5% GST under the Reverse Charge Mechanism (RCM) in accordance with Notification No. 43/2017-Central Tax (Rate).
This clarification removes doubts that existed among agricultural cooperatives regarding tax liability on such transactions.
Q7. What is the GST rate on imitation zari thread after this circular?
Answer:
The GST rate on imitation zari thread or yarn, irrespective of its trade name, has been reduced from 12% to 5%, effective from 27 July 2023.
Let’s understand this with an example. If a textile manufacturer purchases imitation zari thread after 27 July 2023, GST will generally be charged at 5%, provided the product falls within the notified category. The circular also regularizes earlier disputes on an "as is" basis.
Q8. What clarification has been issued for plates and cups made from areca leaves?
Answer:
The circular regularizes GST issues relating to plates and cups made from areca leaves for the period prior to 1 October 2019.
Many businesses actually faced classification disputes during the early years of GST. Instead of reopening those matters, the GST Council recommended regularizing them on an "as is" basis to reduce litigation and provide certainty to manufacturers and traders.
Q9. What GST rate applies to goods falling under HSN 9021?
Answer:
The circular clarifies that all goods falling under HSN 9021, including trauma, spine, and arthroplasty implants, attract 5% GST. This clarification resolves earlier ambiguity that existed because similar products attracted different GST rates before 18 July 2022.
However, the circular specifically states that no refund will be granted where GST had already been paid at the higher rate of 12%.
Q10. Does the circular allow taxpayers to claim refunds where higher GST has already been paid?
Answer:
No. This is one of the most important points in the circular.
Although several issues have been regularized on an "as is" basis, the circular clearly provides that no refund will be granted in cases where GST has already been paid at a higher rate for any of the goods covered by the clarification. Businesses should therefore not expect retrospective refund claims based on these changes.
Related Resource:
GST Compliance: https://finodha.in/gst-compliance/
Q11. What does "regularized on an as is basis" mean?
Answer:
It means the Government has decided not to disturb the GST treatment already adopted by taxpayers during the specified past period, provided there were genuine interpretational doubts.
In simple terms, businesses generally do not need to revise past tax positions solely because this clarification has been issued. However, this regularization also means taxpayers cannot seek refunds merely because a lower GST rate has now been clarified.
Download PDF: Circular No. 200/12/2023 - GST
More Information: https://taxinformation.cbic.gov.in/
Read more interesting articles:
