The Central Board of Indirect Taxes and Customs (CBIC) has recently issued Circular 206/18/2023 dated 31/10/2023 to provide clarifications on certain issues related to GST levy and applicability. The circular addresses queries received from the trade and industry and aims to ensure uniformity in the implementation of GST provisions across the country.
CBIC GST Circular 206/18/2023 dated 31/10/2023: Key Clarifications on Certain Issues under GST
1. GST on passenger transport services and renting of vehicles
Leasing of motor vehicles without operators is not covered under ‘same line of business’ for transport of passengers or renting of motor vehicles. Hence, input tax credit on such leasing services cannot be claimed under notification no. 11/2017-CT(R).
2. GST on supply of electricity by landlords
Supply of electricity bundled with renting of property or maintenance services constitutes composite supply. Principal supply would be renting of property/maintenance services and electricity supply would be an ancillary supply. Applicable GST rate would be that for principal supply.
3. GST rate for job work services for malted barley
Job work services for conversion of barley into malt would attract 5% GST as applicable for job work in relation to food products under customs tariff chapters 1 to 22. This applies irrespective of whether malt is used as final product or for further manufacture of alcoholic beverages.
4. GST exemptions for District Mineral Foundations Trusts
District Mineral Foundations Trusts (DMFTs) set up by State Governments are clarified as Governmental Authorities eligible for GST exemptions on par with other authorities.
5. Exemption for horticulture services provided to CPWD
Supply of horticulture/horticulture works (goods value not more than 25% of total value) to CPWD are exempt from GST under notification no. 12/2017-CTR dated 28.06.2017.
This circular aims to address several open issues and provide clarity on GST applicability. It would help ensure uniformity in tax treatment and avoid future disputes/litigation. The trade, industry and other stakeholders should take note of these clarifications while discharging GST compliance and availment of input tax credits.