Taxability of contractual penalties: GST applies only when payment is consideration for an independent agreement.
GST applies to payments only when there is an express or implied contractual agreement under which one party undertakes to do, refrain from, or tolerate an act and the other pays consideration for that obligation. Payments that merely compensate for breach or are statutory penalties with no contractual offer to tolerate (such as liquidated damages, forfeiture of earnest money in certain bids, statutory compensation under court orders, and fines for legal violations) are not consideration for a supply and are not taxable. Ancillary commercial charges (cancellation fees, late payment fees, early termination fees) that compensate for a facility provided are taxable as part of the principal supply unless that principal supply is exempt.

GST rate and exemption clarifications: ice cream parlours regularised; educational, IVF, transit cargo and toll treatments defined.
The circular classifies and clarifies GST treatment for varied services: ice cream parlours' sales are taxable at the standard rate prospectively with past lower rate payments regularised; educational entrance/application/migration fees are exempt as services by educational institutions; storage of ginned/baled cotton was exempt prior to July 18, 2022; transit cargo services to and from Nepal and Bhutan including return of empty containers are exempt subject to customs/transhipment and tracking rules; renting of vehicles with operator for mineral transport is rental service and not road goods transport and thus not exempt; location charges paid upfront with long term lease premiums form part of exempt upfront amount.

Withdrawal of refund circular: airport retail refund clarification rescinded after retrospective omission of rule 95A.
Circular providing clarifications on rule 95A-concerning refund of tax on inward supply by retail outlets in international airport departure areas to outgoing international tourists-has been withdrawn ab initio because the rule has been omitted retrospectively; the Commissioner of State Tax has annulled the earlier circular, removing it as authoritative guidance on refund eligibility and procedure for those supplies.

Refund of unutilised ITC for exported electricity: filing requirements, REA-based relevant date and formulaic calculation clarified.
Procedure for refund of unutilised ITC on exported electricity requires filing FORM GST RFD-01 under "Any Other" with Statement 3B, Statement 3A calculation, REA monthly statement from RPC and tariff agreements; relevant date is the last date of the month in which export appears in REA; refund computed under Rule 89(4) using REA scheduled energy multiplied by contracted tariff, using the lower of REA and invoice quantities, and adjusted total turnover excludes domestic electricity.

Re-credit in electronic credit ledger via PMT-03A restores erroneously refunded input tax after deposit and officer order.
Taxpayer must deposit the erroneous refund with applicable interest and penalty through FORM GST DRC-03 by debiting the electronic cash ledger and indicate the reason for payment; then submit a written request in Annexure A to the jurisdictional proper officer. Upon verifying full payment through DRC-03, the proper officer shall re-credit an amount equivalent to the erroneous refund into the electronic credit ledger by order in FORM GST PMT-03A, preferably within thirty days from receipt of request or from payment, whichever is later.

Inverted duty structure refunds admissible where concessional notifications cause lower output tax rates than input tax rates.
Refund under the inverted duty structure is admissible where input tax credit accumulates because the rate on outward supplies is lower than on inputs at the same time due to supplies made under a concessional notification providing a lower rate for specified goods, except where output is nil-rated or fully exempted or specifically excluded by government notification.

Input tax credit availability for deemed exports clarified; credit excluded from net ITC and credit ledger use limited to output tax.
Tax paid on supplies regarded as deemed exports is made available to recipients as credit only for enabling refund claims and is not treated as Input Tax Credit under Chapter V, thus it is not subject to blocked credit provisions and is excluded from "Net ITC" for refund computations; the proviso permitting credit where employers are legally obliged to provide goods or services applies to the whole exclusion clause, leasing in the exclusion is limited to motor vehicles/vessels/aircraft, employer perquisites under contract are not taxable supplies, electronic credit ledger may be used only for output tax (excluding reverse charge) and not for interest, penalty or other amounts, while the electronic cash ledger may meet tax, interest, penalty and other liabilities.

Fraudulent input tax credit: recovery and fraud-specific penalties apply; issuers of fake invoices face separate penal sanctions.
Issuing tax invoices without actual supply does not amount to "supply" and does not create tax demand under the usual recovery provisions; the issuer, however, is punishable under the penal provision for issuing invoices without supply. A recipient who fraudulently avails and uses input tax credit on such invoices is liable to recovery of the ITC, interest and penal action under fraud-specific provisions; if penalised under those provisions, duplicate penalties for the same act are precluded. Where the recipient further issues invoices without supply to pass on credit, no tax demand arises for outward transactions, but penal liability attaches for issuing invoices without supply and for taking/utilizing ITC without receipt; other penal or confiscation provisions may also be invoked depending on facts.

Inter State supply reporting: ensure place of supply-wise disclosure and correct ITC reversal classification for accurate credit settlement.
Registered persons must report place of supply-wise inter State supplies to unregistered persons, composition taxpayers and UIN holders in both outward statements and the return to ensure correct destination based settlement. Total ITC is auto populated from the inward statement into the return; registered persons must record absolute ineligible reversals and temporary reversible reversals in the designated reversal sub tables so that Net ITC equals auto populated total less these reversals and only that net amount is credited to the electronic credit ledger.

Algorithmic trading marketing restrictions: brokers prohibited from citing past or expected returns, must remove claims and report compliance.
Stock brokers providing algorithmic trading services shall not directly or indirectly refer to past or expected future return/performance of an algorithm or associate with platforms that do; brokers using or associated with such references must remove them or disassociate within seven days. Stock exchanges must put in place procedures, amend bye laws, notify brokers, monitor compliance with these prohibitions and submit a compliance report to SEBI within sixty days. The measures are effective immediately and non compliance may invite regulatory enforcement to protect investor interests.

Audit extension under proviso to GST audit provision after seized documents and delayed investigation, further time granted.
Extension of time for completion of statutory audit under the proviso to subsection (4) of section 65 of the West Bengal GST Act is granted for Youthstar Vanijya Private Limited for the audit of the period 1 July 2017 to 31 March 2018. Documents of the auditee were seized by an investigative unit and delay in receiving the investigation report prevented completion of the Final Audit Report and opportunity for hearing. The Commissioner, invoking the proviso, extends the audit completion period up to 31 October 2022 or the nine month limit from commencement, whichever is earlier, with immediate effect.

Input tax credit treatment clarified: deemed export ITC excluded from standard ITC reckoning and not included in net ITC.
For deemed exports, tax paid is provided to recipients as ITC solely to enable portal refund claims; that ITC is not ITC under Chapter V, not subject to Section 17 restrictions, and is excluded from "Net ITC" for refund calculations. The proviso to clause (b) of sub section (5) of section 17 applies to the whole clause; "leasing" disallowance covers only motor vehicles, vessels and aircraft. Perquisites under employment contracts are not taxable supplies. Electronic credit ledger may discharge output tax but not reverse charge tax, interest, penalty or fees; electronic cash ledger may meet tax and other liabilities.

Inter state supply reporting: ensure correct place of supply entries and proper ITC reversal reporting to protect tax settlement.
Registered persons must report place of supply wise inter State supplies to unregistered persons, composition taxpayers and UIN holders in Table 3.2 of FORM GSTR 3B and corresponding tables of FORM GSTR 1; amendments in GSTR 1 must be reflected in GSTR 3B. Table 4(A) is auto populated from FORM GSTR 2B but registered persons must identify and report absolute, non reclaimable reversals in Table 4(B)(1) and conditionally reversible reversals in Table 4(B)(2). Net ITC in Table 4(C) equals 4A minus [4B(1)+4B(2)] and only that amount is credited to the Electronic Credit Ledger; ineligible ITC under section 17(5) is to be shown in 4(B).

Withdrawal of Circular rescinds prior guidance following retrospective omission of rule and aligns state guidance with central circular.
Rule 95A of the Tamil Nadu GST Rules, which provided refunds for inward supplies to outgoing international tourists at airport departure areas, was omitted retrospectively, and consequently the Commissioner has withdrawn Circular No. 78/2019-TNGST ab initio, nullifying the earlier clarifications and aligning state administrative guidance with the central revenue circular and the amended statutory framework.

Re credit of electronic credit ledger allowed where erroneous refunds are repaid via Form GST DRC 03 and PMT 03A order.
Where a taxpayer deposits an erroneously sanctioned refund, together with applicable interest and penalty, by debiting the electronic cash ledger through Form GST DRC 03, the jurisdictional proper officer shall, on satisfaction of full repayment, re credit an equivalent amount to the taxpayer's electronic credit ledger by passing an order in Form GST PMT 03A. Pending portal automation the taxpayer must submit a written request in the prescribed annexure; the officer should preferably complete re credit within thirty days from receipt of the request or payment, whichever is later.

Refund of accumulated ITC allowed where concessional notification lowers output tax rate, subject to exclusions and conditions.
Refund of accumulated input tax credit is allowable where accumulation results because the rate on outward supplies of the same goods is lower than the rate on inputs at the same point in time due to a Government concessional notification, subject to other statutory conditions; refunds remain inapplicable where output supplies are nil-rated or fully exempted or where supplies are specifically excluded by Government notification.

Prosecution under the CGST Act requires strong evidence, mens rea, and careful sanction before criminal proceedings are launched.
Prosecution under the CGST Act is to be launched only where offences under section 132 are supported by adequate evidence meeting the criminal standard of proof. Prosecution should not rest merely on confirmation of demand in adjudication and should not be initiated in technical disputes or cases based only on interpretative differences. In company cases, proceedings should be confined to persons responsible for day-to-day conduct or those who actively participated in, or connived at, the evasion.

Extension of audit completion period for specified GST audits blocked by portal glitches; deadline moved to early September.
The Commissioner further extends, under the proviso to subsection (4) of section 65 of the WBGST Act, the time for completion of audit cases for the period 1 July 2017 to 31 March 2018 that commenced on or before 31 May 2022, up to 5 September 2022 or nine months from the date of commencement of each audit, whichever is earlier, citing GSTN BO portal technical glitches; the order is effective immediately.

Plant quarantine exemption: bamboo sticks under 6mm excluded from PQ clearance for processed items list.
The Department of Agriculture & Farmers Welfare approved inclusion of bamboo sticks less than 6 mm thickness in the list of processed plant items exempt from Plant Quarantine Clearance; the Ministry of Finance (CBIC) instructed customs and preventive formations to sensitize officers, implement the revised Annexure of exempted processed items, and report any difficulties in operationalising the change to the Board.

Examination fee revision raises enrolment cost for Limited Insolvency and Valuation Examinations effective October onwards.
Revision of examination fees increases the per enrolment charge for the Limited Insolvency Examination and Valuation Examinations, payable for each enrolment on or after 1 October 2022; the change applies to all candidates and examination stakeholders and is issued under the statutory regulatory powers of the Insolvency framework and valuation rules.