The Union Finance Minister Nirmala Sitaraman chaired the 50th meeting of the GST Council on 11th July 2023 at Vigyan Bhawan in New Delhi including Revenue Secretary, Sanjay Malhotra, CBIC chairman, Vivek Johri.
The GST council stated new insertion of Section 122A in Central Goods and Services Tax Act, 2017 providing for special penalty for non-registration of machines by manufacturers of tobacco, pan masala & other similar items. The topics are still in discussion with the GoM.
The press release of the GST Council stated that in accordance with the recommendations of the Group of Ministers (GoM) on Capacity based taxation and Special Composition Scheme approved by the Council in 49th meeting, the Council has made the following recommendations:
(i) issuance of notification under Section 148 of CGST Act, 2017 prescribing a special procedure to be followed by the manufacturers of tobacco, pan masala & other similar items inter alia for registration of machines and for filing of special monthly returns;
(ii) insertion of Section 122A in CGST Act, 2017 providing for special penalty for non-registration of machines by such manufacturers;
(iii) provisions of Section 123 of Finance Act, 2021, amending Section 16 of IGST Act, to be notified with effect from 01.10.2023 and notification to be issued under section 16(4) of IGST Act. 2017 to provide for restriction of IGST refund route in respect of exports of tobacco, pan masala & other similar items as well as mentha oil.
With an aim to curb GST evasion by pan masala and gutkha companies, the Government is likely to conduct stringent scrutiny and audits. However, a plan to levy Goods and Services Tax (GST) on them on the basis of installed manufacturing capacity may be dropped.
In May 2021, the GST Council set up a group of ministers (GoM), headed by Odisha finance minister Niranjan Pujari, to examine the feasibility of levying GST on products such as pan masala and gutkha, based on the installed capacity of the units, rather than their actual production.
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