GST Compendium – December 2021

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The December edition of GST Compendium analyses the Central Board of Indirect Taxes (CBIC) changes in GST rates on textiles and footwear sector, the Apex Court’s decision on outdoor catering services, perspective on the Customs Special Valuation Branch (SVB) proceedings and appeal mechanism and more.

Key highlights:

Important amendments/updates: As per the recommendations of the GST Council related to inverted duty structure, the Central Board of Indirect Taxes and Customs (CBIC) has notified changes in GST rates applicable for the textiles and footwear sector, effective 1 January 2022. However, there are few industries, such as fertilisers, tractors, renewable energy equipment, etc., where the issue persists and needs intervention.

Key judicial pronouncements: On the judicial front, the Apex Court has held that the outdoor catering services used primarily for personal use or consumption of any employee are excluded from the definition of input service under the erstwhile indirect tax regime. Since similar restrictions exist under the GST regime, the government should consider amending the provisions appropriately to ensure free flow of credit related to such expenditure.

Important developments in direct taxes: On the direct tax front, the Central Board of Direct Taxes (CBDT) has provided clarity concerning eligibility for exemption under Section 10(23FE) of the Income-tax Act, 1961 (Act) and has rolled out a new Annual Information Statement, which covers many financial transactions of the taxpayer. Further, the CBDT has also notified the e-Settlement Scheme, 2021 for the pending settlement applications.