54th Council Proposes the Removal of GST Rules 96(10), 89(4A), and 89(4B) for Exporters

Acknowledging the hardship being faced by the exporters as of restriction concerning the refund on exports, the 54th GST Council Meeting as a trade facilitation measure, recommended omission of Rule 96(10), rule 89(4A) & rule 89(4B) from CGST Rules, 2017 prospectively, where the advantage of the specified concessional/ exemption notifications is taken on the inputs.

The Council explained that regarding reassessments through the jurisdictional Customs authorities, “the IGST paid on exports, refunded to the said exporter shall not be considered to be in contravention of provisions of sub-rule (10) of rule 96 of CGST Rules”.

Restrictions are been levied by the council on refunds through Rule 96(10), rule 89(4A) & rule 89(4B) of CGST Rules, 2017.

Meanwhile, the council proposed Nov 01, 2024, as the enforcement date of Section 128A in CGST Act, 2017 dealing with ‘Waiver of interest or penalty or both relating to demands raised u/s 73, for certain tax periods’.

It was suggested by the council that the issuance of a circular to cite the process and numerous problems pertinent to the execution of newly inserted sections 16 (5) and (6) of the CGST Act.

Also, the council specifies that the past demands would be regularized as is where the basis for the import of service through the branch office, affiliation services, research and development services, transport of passengers by helicopters, film distribution, application fees for furnishing electricity connection, rental charges against electricity meter and others.

The Council on Composite Supply of Services explained that “PLC is naturally bundled with it and are eligible for same tax treatment as the main supply that is, construction service” and “ancillary/intermediate services are provided by GTA, like loading /unloading, packing/ unpacking, will not be treated as composite supply of transport of goods”.

Read Also: Delhi HC: Modification to GST Rule 89(4)(c) is Not Retroactive, Which Caps “Export Turnover” and Restricts Refunds

Concerning the Invoice management system the council specified that the assesses shall be provided the chance to declare their opening balance for these ledgers by Oct 31, 2024.

Clarification on streamlining trade measures by the GST Council

• The Council suggested the insertion of rule 164 in CGST Rules, 2017, including specific Forms, furnishing for the procedure and conditions for claim of benefit of waiver of interest or penalty or both, concerning tax demands u/s 73 of CGST Act, about FYs 2017-18, 2018-19 and 2019-20, as per section 128A of CGST Act. The Council suggested notifying u/s 128A(1) of the CGST Act, Mar 31, 2025, as the date on or before which the tax payment may be made by the registered persons, to claim the said benefit as per section 128A of the CGST Act.
• It was suggested by the council that a special procedure for rectification of orders may be notified u/s 148 of the CGST Act, to be followed by the class of taxable persons, against whom any order u/s 73 or section 74 or section 107 or section 108 of the CGST Act has been issued confirming demand for inaccurate Input tax credit claim based on violation of provisions of section 16(4) of the CGST Act, but where such input tax credit is now available under the provisions of section 16(5) of the CGST Act, and where appeal against the said order has not been filed.
• The Council instructed, that the inputs were initially imported with no payment of integrated tax and compensation cess by taking the benefits under Notification No. 78/2017-Customs on Oct 13, 2017, or Notification No. 79/2017-Customs on Oct 13, 2017, but IGST and compensation cess on these imported inputs are thereafter paid, including applicable interest, and the Bill of Entry concerning the import of the said inputs is got reassessed via the jurisdictional Customs authorities to this outcome, the IGST paid on exports, refunded to the said exporter would not get regarded to violate provisions of sub-rule (10) of rule 96 of CGST Rules.

Considering the issue being suffered by the exporters as of the limitation concerning the refunds on the exports, levied vide rule 96(10), rule 89(4A) & rule 89(4B) of CGST Rules, 2017, in cases where advantage of the concessional/ exemption notifications is taken on the inputs, the Council instructed to prospectively omit rule 96(10), rule 89(4A) & rule 89(4B) from CGST Rules, 2017. It will simplify and expedite the procedure for refunds concerning such exports.

The aforesaid suggestions would get notified including the related clarifications via CBIC.