Extended warranty as service: sold separately or after original sale is taxable as a distinct service, supplier liable for GST.
Clarification extends prior guidance so that replacement of entire goods under warranty is treated like replacement of parts for GST and input tax credit (ITC) purposes; distributor replacement from own stock followed by manufacturer replenishment by delivery challan without consideration is not taxable and requires no ITC reversal by the manufacturer; and extended warranty supplied by a different person or sold after original supply is a distinct supply of services with the warranty supplier liable to discharge GST.

Salvage value taxation: GST applies when insurer acquires salvage on full claim settlement, otherwise not.
GST attaches only where a supply exists. If the insurer deducts salvage/wreck value from the claim (per contract), ownership of salvage remains with the insured and no GST liability arises for the insurer. If the insurer pays full claim amount without deducting salvage so that salvage vests in the insurer, the insurer must discharge GST on disposal or sale of the salvage.

Reversal of input tax credit clarified: non includible portion of life insurance premium is not treated as exempt supply.
The portion of life insurance premium excluded from taxable value under Rule 32(4) is not a nil rated, exempted or non taxable supply merely by virtue of its exclusion; accordingly, that portion does not trigger reversal of input tax credit under the reversal provisions applicable when supplies are exempt or non taxable, and no reversal is required for taxable life insurance policies.

GST on employee share transfers: cost reimbursements not import of services; markups or fees taxable on reverse charge.
Where a foreign holding company issues ESOP/ESPP/RSU directly to employees of its Indian subsidiary and the subsidiary reimburses only the cost of the securities on a cost-to-cost basis, such reimbursement is not a supply of goods or services and is not liable to GST; however, any additional fee, markup, or commission charged by the foreign holding company is taxable as consideration for facilitation/arrangement services and attracts GST payable by the domestic subsidiary on reverse charge basis.

Proportionate input tax credit reversal verification: suppliers may rely on CA/CMA certificates or recipient undertakings to evidence reversal.
The Circular clarifies that post-supply discounts excluded from taxable value require that the recipient has effected the proportionate reversal of input tax credit. Due to lack of portal verification, suppliers may obtain a CA/CMA certificate from the recipient detailing credit notes, related invoice numbers, ITC reversal amounts and the form/return evidencing reversal, with UDIN. For small-value discounts within a financial year, a recipient's undertaking with similar details is permissible. These certificates/undertakings are admissible evidence for tax officers and may be procured retroactively if required.

Reverse charge input tax credit: ITC timing follows the financial year of the recipient issued invoice, subject to tax payment.
Where tax is payable by the recipient under the reverse charge mechanism for supplies from unregistered persons, the relevant financial year for the time limit to claim input tax credit is the financial year in which the recipient issues the invoice under the recipient invoice requirement, provided the recipient pays the tax and satisfies other conditions and restrictions; delayed issuance after time of supply attracts interest on late tax payment and possible penal consequences.

Open market value: invoice value for import of services from related persons deemed where recipient eligible for input tax credit.
Where a registered person in India imports services from a related person abroad and the recipient is eligible for full input tax credit, the invoice value declared by the recipient may be deemed to be the open market value for valuation purposes; if no invoice is issued by the supplier, a declared nil value by the recipient may be treated as the declared value and deemed the open market value. Tax on such import of services is payable by the recipient under the reverse charge mechanism and the recipient must issue a self invoice.

Place of supply for unregistered persons: delivery address on the invoice determines tax jurisdiction, not billing address.
Place of supply for goods to unregistered persons is the recipient address recorded in the invoice, and where no recipient address is recorded, the supplier's location; recording the recipient's State on the invoice suffices. If billing and delivery addresses differ on the invoice, the delivery address on the invoice is the place of supply, and suppliers may record the delivery address as the recipient's address to determine the correct place of supply.

Special procedure compliance for manufacturers requires machine identification, certified energy ratings, and specified GST form filings.
Manufacturers under the revised special procedure must complete machine details in FORM GST SRM-I: make/model optional (year of purchase may substitute), machine number mandatory (assign a numeric identifier if none), and declare electricity consumption from machine records or via a Practicing Chartered Engineer certificate in FORM GST SRM-III uploaded with the form. For goods with no MRP, enter sale price in Table 9. The Chartered Engineer must hold a certificate of practice from the Institute of Engineers India. The procedure excludes SEZ units and manual packing; the final packing machine is to be reported, and job workers' compliance falls to the principal if they are unregistered.

Monetary limits for government appeals restrict departmental appeals to higher forums, subject to specified exclusions and merit review.
Prescribes monetary thresholds under the CGST Act below which Central Tax officers shall not file appeals or Special Leave Petitions, setting rules for aggregating disputed tax, interest, penalty, late fee and refund amounts for threshold application, and applying thresholds to composite orders on the total disputed amount. Enumerates exclusions where appeals may be filed irrespective of limits-including vires challenges to statutes, rules or instruments, recurring interpretative issues like valuation, classification, refunds and place of supply, matters with adverse comments or costs, and other cases the Board considers necessary-and stresses merits-based litigation and non-precedential effect of non-filing.

Goods and services tax changes approved covering exemptions, amended statutes, refunds, filing rules and procedural compliance measures.
Council agreed to Law Committee proposals to amend GST statutes and rules: exclude Extra Neutral Alcohol for manufacture of alcoholic liquor from GST; insert a provision empowering regularisation of non-levy/short-levy arising from general practice; restrict IGST refunds where export duty applies; clarify time of supply and invoicing for reverse charge transactions; and introduce consequential procedural and form changes to refund, return and appeal processes to improve compliance and reduce litigation.

Early tax recovery: Principal Commissioner must record written reasons before ordering payment within a shorter period to protect revenue.
The instruction clarifies that recovery proceedings generally commence only after three months from service of a GST demand order, but a Principal Commissioner/Commissioner may, for reasons recorded in writing and where expedient in the interest of revenue, require payment within a shorter period. The jurisdictional Deputy or Assistant Commissioner referring a case for early action must provide justifications; the Principal Commissioner/Commissioner must record specific reasons based on credible evidence of revenue risk and issue written directions for early payment. Failure to comply permits recovery by the Deputy or Assistant Commissioner under the prescribed enforcement procedure.

Assignment of new registrations to State tax administrations may increase intake; states should prepare for extra registration workload.
New registration applications submitted during 25 May to 31 May 2024 will be assigned to the relevant State tax administrations (with some routed as deemed approvals), and those taxpayers will remain assigned to States going forward; States are advised to prepare for an anticipated surge in registration workload and take necessary operational measures.

Investigation approval: Prior hierarchical authorisation and coordination required for cross jurisdictional and sensitive tax probes.
CGST field formations must follow a structured regime where the (Pr.) Commissioner is responsible for approving and conducting investigations within their jurisdiction, coordinating with other formations or a central investigative channel when issues extend across jurisdictions or involve multiple registrations, and referring policy-sensitive interpretative issues to the relevant policy wing. Communications with listed or public entities should commence with official letters requesting specified records within a reasonable timeframe rather than summons; summons and letters must disclose the specific nature of the inquiry, avoid vague language, and not call for information already available on the GST portal. Prior reasoned approval for summons, e-file documentation, prompt conclusion of investigations, and an internal grievance officer are mandated.

Investigation jurisdiction: All India DGGI procedures to coordinate inter zonal probes and streamline summons and record based inquiries.
DGGI units have all India jurisdiction for GST enforcement but must follow operating procedures: Zonal ADG/ADG approval is required to initiate investigations, record based investigations are to be initiated by the ZU where the entity is registered, and cross jurisdictional or sensitive cases require higher approval. Summons and information requests must be specific, not fishing, avoid portal data demands, and receive prior reasoned approval, with mandatory e file documentation. Coordination among offices is required to prevent duplication and investigations should conclude promptly, ordinarily within one year.

Secondment taxability: determine GST exposure by contract and factual matrix; extended limitation requires evidence of fraud or concealment.
Secondment may constitute a taxable manpower supply service, but taxability under GST must be determined by a nuanced, fact-specific examination of the contract and working arrangements between the overseas company and the Indian entity. Extended limitation for assessment or recovery may be invoked only where investigations produce material evidence of fraud, wilful misstatement, or suppression of facts to evade tax; mere non-payment is insufficient and such evidence should be included in any show cause notice.

Electronic service of notice summaries required; officers must upload DRC 01 and DRC 07 on portal for compliance.
Proper officers must serve notice summaries electronically on the GST portal in FORM GST DRC-01 and upload order summaries in FORM GST DRC-07, as required by rule 142 of the CGST Rules. Notices concerning demand, recovery, incorrect input tax credit, erroneous refunds, interest or penalties, and orders specifying tax, interest and penalty, must be made available electronically to enable recordkeeping, tracking of proceedings, appeals and recovery. Field formations relying on manual issuance are directed to comply and supervisory officers must ensure adherence; implementation issues should be reported to the Board.

GST on composite supply and pure agent treatment clarified; principal supply governs rate and specific exclusions affirmed.
Clarifies that input tax credit for the "same line of business" covers passenger transport and renting with operator but excludes leasing without operator; electricity bundled with rent or maintenance is a composite supply taxed at the principal supply rate, while electricity supplied and charged as a pure agent is excluded from value; job work converting barley into malt is treated as job work in relation to food products and attracts the food-product job work rate; District Mineral Foundations Trusts are Governmental Authorities eligible for government exemptions; horticulture services to CPWD with goods not exceeding 25% value qualify for notification-based exemption.

GST rate on imitation zari thread clarified: metallised polyester/plastic film yarn falls under reduced GST; no inversion refunds.
Metallised polyester film or plastic film converted into yarn or combined with textile yarns falls within the HS description of yarn combined with or covered by metal and is to be treated as imitation zari thread or yarn under Schedule I, thereby attracting the concessional GST rate recommended by the Council; additionally, no refund shall be permitted on metallised polyester/plastic film on account of inversion, and the position has been given effect through amendment of the Central Tax (Rate) notification.

Supply of service between related persons: guarantees are taxable and valuation follows Rule 28, with specified exceptions for personal guarantees.
The circular treats personal guarantees by directors as a supply of service between related persons and directs valuation under Rule 28; where RBI mandates no consideration for such personal guarantees, open market value may be treated as zero, yielding nil taxable value unless remuneration is actually paid. Corporate guarantees provided by related companies or by a holding company for its subsidiary are also supplies of service, with taxable value to be determined pursuant to Rule 28(2) as inserted by Notification No. 52/2023, irrespective of input tax credit availability. Rule 28(2) does not apply to personal guarantees.