Important GST Advisories—May 2025

Important GST Advisories—May 2025

May, 01,2025– Implementation of HSN Code Reporting in GSTR-1/1A (Phase-3)

• Starting May 2025, the third phase of HSN code reporting in GSTR-1/1A is being rolled out. Under this phase, taxpayers will need to select HSN codes from a dropdown list—4-digit codes for those with turnover up to ₹5 crore, and 6-digit codes for those exceeding ₹5 crore. Manual input of HSN codes will no longer be allowed.
• The system will now auto-populate item descriptions using a predefined HSN master. Additionally, Table 12 has been updated to include separate tabs for B2B and B2C supplies, with built-in validations to cross-check values across other related tables. Initially, these validations will only generate warnings.
• Furthermore, from May 2025 onwards, completing Table 13 (which captures document details) will be mandatory. This section can no longer be submitted with blank fields during return filing.

May 08,2025-Changes in Refund Filing Process for Specific Categories

GSTN has introduced key modifications to the refund application process for the following types of claims:

• Export of services with tax payment
• Supplies to SEZ Units/Developers with tax payment
• Refunds claimed by suppliers in case of deemed exports

A notable change is the removal of the requirement to specify a particular tax period (“From” and “To”) while filing refund applications under these categories. Now, taxpayers can directly choose the applicable refund category and initiate the process by clicking “Create Refund Application.”

It is essential that all relevant GST returns (like GSTR-1, GSTR-3B, etc.) are filed up to the date of applying for the refund.

These refund types have now shifted from a tax-period-based system to an invoice-based approach. Eligible invoices can be uploaded under the following statements:

• Statement 2: For exports of services with tax payment
• Statement 4: For SEZ supplies with tax payment
• Statement 5B: For deemed exports where the supplier is applying

Once an invoice is attached to a refund application, it becomes locked and cannot be edited or reused for any other refund claim. These invoices will only be unlocked if the refund application is withdrawn or a deficiency memo is issued.

May 16,2025 – Reporting in Table 3.2 of GSTR-3B

• The earlier announcement regarding making Table 3.2 of GSTR-3B non-editable from April 2025 has now been put on hold following concerns raised by taxpayers.
• As a result, Table 3.2 will continue to remain editable until further notice.
• Taxpayers are encouraged to report values accurately, and any future implementation of this change will be communicated separately by the GSTN.

High Energy Batteries (India) Ltd- Appellate Authority for Advance Ruling (AAAR), Tamil Nadu.

Issue

Whether the value of silver provided free of charge by the buyer (in the form of used batteries) should be added to the taxable value of the newly manufactured batteries under Section 15(2)(b) of the CGST Act.

Facts

The recipient of the goods supplied old and used batteries (containing silver) to the supplier without any cost. These were then used as raw material in the production of new batteries. The question arose as to whether the value of silver, even though not charged, should form part of the taxable value of the finished goods (new batteries). The Authority for Advance Ruling held that such free-of-cost inputs must be included in the value for GST. The Taxpayer contested this position, leading to an appeal.

Held

The Appellate Authority confirmed that since silver is a key component in the battery manufacturing process, its cost cannot be ignored for valuation just because it was not paid for in cash. If the recipient had not supplied the silver, the supplier would have incurred the cost. Hence, it qualifies as a non-monetary consideration directly linked to the supply, and its value must be added to the taxable amount. Provisions under Sections 7, 2(31), 15(2)(b), and 15(4) of the CGST Act, along with Rule 27(b) of the CGST Rules, mandate inclusion of such free-of-cost materials in the assessable value for GST.

Deepak Fertilizers and Petrochemicals Corporation Ltd. vs. Union of India and Ors.- Gujarat High Court

Issue

Can a Private Warehouse License under Section 58 of the Customs Act, 1962 be denied solely because there are ongoing legal disputes involving the applicant, even if those disputes do not relate to offences under the Customs Act?

Facts

The applicant’s request for a private warehousing license was turned down by the authorities citing Regulation 3(2)(c) of the Private Warehouse Licensing Regulations, 2016, due to pending litigations. However, it was noted that the pending cases did not involve any offences as defined under the Customs Act (Sections 132–140A), nor were there any penal findings under the Central Excise Act or Chapter V of the Finance Act. The taxpayer argued that none of the proceedings amounted to “offences” and that a mere legal dispute or disagreement should not disqualify them from obtaining a license.

Held

The High Court observed that an “offence” implies a violation of law in a criminal or penal sense, whereas “contravention” refers to a dispute or challenge, often subject to appeal. Since the pending litigations were appellate in nature and did not involve any confirmed penal offences under the relevant statutes, the rejection of the license application on this ground was unjustified. The Court allowed the writ petition, setting aside the order of rejection, and directed reconsideration of the application in accordance with law.

GST Exemption Denied on Subcontracted Manpower for Jal Jeevan Mission- AAAR West Bengal

Issue:
Whether GST exemption applies on manpower services subcontracted for work under the Jal Jeevan Mission.

Facts:
The Jal Jeevan Mission, a government initiative aimed at providing safe drinking water to rural households, has certain exemptions notified under GST for its supplies and services. However, the question arises if services like manpower supply subcontracted by the main contractor also qualify for GST exemption.

Ruling / Held:
Tax authorities have clarified that GST exemption does not extend to subcontracted manpower services unless such services are directly notified for exemption. In other words, exemption applies only to the specified activities or supply by the primary service provider, and subcontracted manpower services are treated as taxable supply.

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