JULY 12, 2023
What is SUV?
DO you know what is Dinutuximab? It seems it is now known as Quarziba and is a medicine for the treatment of cancer. We all know there was a meeting of the GST Council yesterday. It was said to be a historic meeting as it was the 50th time that the GST Council was meeting. The meeting was so historic that the Postal Department came out with a Special Cover and customised ‘My Stamp’ to celebrate this event. They do so to commemorate important milestones in the march to progress and undoubtedly this was one, no matter nobody is using postal covers and stamps these days.
What has Dinutuximab got to do with GST Council meeting and Postal stamp? The historic meeting decided to exempt Dinutuximab from IGST when imported for personal use. It was further decided to exempt IGST on medicines and Food for Special Medical Purposes (FSMP) used in the treatment of rare diseases enlisted under the National Policy for Rare Diseases, 2021 when imported for personal use; but remember conditions apply. Similarly, IGST exemption will also be given to FSMP when imported by Centres of Excellence for Rare Diseases or any person or institution on recommendation of any of the listed Centres of Excellence. The GST Council is not a simple gathering of politicians and bureaucrats. It is a citadel of India’s co-operative federalism and the meetings are attended by the finest ministers and best of babus. You talk to a finance minister and you know he is a cut above your normal politician and that may be the reason that good finance ministers are not good politicians and find it difficult to win elections. Losing an election is not the only way that a finance minister loses his job. Getting back to our GST Council meeting yesterday, apparently it was a meeting of master minds and they took some vital decisions, some of which are highlighted here.
What is an SUV?
Our Good and Simple Tax - GST has taught us what an SUV is. As per Notification No.1/2017- Compensation Cess (Rate), dated the 28th June, 2017, these are the criteria which determine what an SUV is:
Motor vehicles of engine capacity exceeding 1500 cc, popularly known as Sports Utility Vehicles (SUVs) including utility vehicles. Explanation. - For the purposes of this entry, SUV includes a motor vehicle of length exceeding 4000 mm and having ground clearance of 170 mm. and above
1. It should be popularly known as Sports Utility Vehicle (SUV) including utility vehicle. (By the way who decides what is popularly known as SUV?)
2. engine capacity should be exceeding 1500 cc
3. includes a motor vehicle of length exceeding 4000 mm.
4. having ground clearance of 170 mm and above.
If it met all the above conditions, the gift was that there would be a compensation cess of something like 22%.
Now, the Good Council has decided to redefine SUV to specify that:
it includes all utility vehicles by whatever name called provided they meet the parameters of Length exceeding 4000 mm, Engine capacity exceeding 1500 cc and having Ground Clearance of 170 mm & above and to clarify by way of explanation that ‘Ground clearance’ means Ground Clearance in un-laden condition.
1. It will include all utility vehicles by whatever name called (need not be popularly known as SUV)
2. Length exceeding 4000 mm
3. Engine capacity exceeding 1500 cc
4. having Ground Clearance of 170 mm & above
It is going to be clarified that ‘Ground clearance’ means Ground Clearance in un-laden condition. But it seems that Automotive Research Association of India (ARAI) has revised the ground clearance measurement norms for cars. The ground clearance will be the distance between the lowest fixed point on a car’s body to the ground in a laden state. By laden, it means that the car has to be loaded up to its gross vehicle weight (GVW) figure. But GST wants the unladen ground clearance.
Wanna launch a satellite?
Do you want to launch a satellite? Be happy that now you need not carry GST into space. As per sl. No. 19C of Notification No.12/2017- Central Tax (Rate), dated the 28th June, 2017, Satellite launch services supplied by Indian Space Research Organisation, Antrix Corporation Limited or New Space India Limited are subjected to nil rate of GST. These are all government companies. Now the GST Council has proposed that GST exemption on satellite launch services may be extended to such services supplied by organisations in private sector also to encourage start-ups. Invite all those private companies to gather and launch their satellites without GST.
Online gaming to be taxed:
The Council has decided to tax Casino, Horse Racing and Online gaming at 28%. For casinos, the Tax will be applicable on the face value of the chips purchased, that is you have to pay the tax before you start playing and losing money. If you win you don’t need to pay tax on the redemption of the chips; the chips are already tax paid. – any way, the Income Tax will take care of the rest of the sad story. In the case of horse racing and online gaming, tax will be on the full value of the bets placed.
Recently, the Karnataka High Court held in
1. There is a distinct difference between games of skill and games of chance; games such as rummy, etc., as was discussed in several decisions, whether played online or physical, with or without stakes would be games of skill and test of predominance would apply.
2. Entry 6 in Schedule III to the CGST Act taking actionable claims out of the purview of supply of goods or services would clearly apply to games of skill and only games of chance such as lottery, betting and gambling would be taxable.
3. Taxation of games of skill is outside the scope of the term "supply" in view of Section 7(2) of the CGST Act, 2017 read with Schedule III of the Act.
4. A game of skill whether played with stakes or without stakes is not gambling.
5. Rummy whether played with stakes or without stakes is not gambling.
6. Online/Electronic/Digital Rummy whether played with stakes or without stakes is not gambling.
But the Finance Minister was emphatic that skill or chance didn’t matter when it comes to GST. So, if you want to lose your money in casinos and online gambling, you are welcome – with 28% GST. Please also see my column Play Rummy - No GST (Jest GST May 17 2023)
Share capital held in subsidiary company:
NASSCOM had made a submission to GST authorities on May 26, 2022 requesting them to issue a Circular clarifying that the activity of holding shares in subsidiary company will not qualify as 'supply of service' under GST.
Now the GST Council has decided to clarify that mere holding of securities of a subsidiary company by a holding company cannot be treated as a supply of services and therefore, cannot be taxed under GST. It seems several notices have been issued demanding tax on this service. Will the notices be withdrawn?
GSTAT in six months:
The Council has recommended the the Rules governing appointment and conditions of President and Members of the proposed GST Appellate Tribunal for enabling smooth constitution and functioning of GST Appellate Tribunal. The Revenue Secretary stated that the GST Appellate Tribunal would be functional in about six months. This will be a rare Tribunal where lawyers are not eligible to be appointed as Judicial Members. Only High Court Judges and District Judges are eligible. The only attraction for a judge – sitting or retired to accept the job as Member Judicial is the extended period of job till the age of around 67 years. But why should a judge who would normally get a pension of about 2 lakh rupees sitting at home without doing anything accept the job of a Member of the Tribunal for another 2 lakh rupees and days and days of drudging hard work, listening to all kinds of arguments throughout the day and writing longish orders. It’s a real tough job and certainly not worth it unless you are a serious patriot wanting to serve the motherland.
It is really fascinating to see the brilliance of our babus, press reporters and the Finance Minister herself. The reporters were asking very pertinent erudite questions, which were answered by the Revenue Secretary, CBIC Chairman and the Finance Minister with the ease that only a very knowledgeable person can display. GST seems to be easy, except for the stakeholders and advisers.
One of the questions put to the Finance Minister was about actionable claim and whether there would be a legal Amendment for it.
The Finance Minister replied without batting an eyelid, "uh yes there will be an amendment to the schedule III of the GST Act and we will be bringing in online gaming into the actionable claim list where item number six very clearly says betting, gambling and lotteries. Betting, gambling and lotteries are already in it; we will be including online gaming also and horse racing as a result that actionable claim will be affected now and therefore, they will be taxable."
How many people dealing with GST know about the existence of schedule III and item number 6 in it?
And see this video clip where the FM intervenes and clarifies what the SUV is.
https://youtu.be/E2l85HpsqWg
PS: I bought a Kia Sonnet car a couple of years ago believing that it is an SUV. But now I find that its length is 3995 mm (just 5mm less); ground clearance is 205 (not sure whether laden or unladen); engine 998 cc(disqualified). So GSTly speaking what I bought was not an SUV!
Until Next week