Ice-cream parlours can breathe easy as the Finance Ministry has said that 18 per cent GST not to be effective retrospectively. It also said that fees for entrance exams, issuance of migration certificates etc and charges for preferred location of land will not attract GST.
Based on the recommendations by GST Council in its June meeting, the Finance Ministry came out with set of circulars clarifying taxation issues on various goods and services.
Confusion on earlier circular
Last September, GST Council recommended levying of GST on ice cream parlours at the rate of 18 per cent with ITC, and not 5 per cent without ITC. The argument was that since they sell already manufactured goods, they are not restaurants and so attract GST at the higher rate.
Accordingly, a circular was issued in October last year for imposition of higher rate, but there was no clarity whether it be prospectively or retrospectively. Thus created some confusion that higher rate could be levied from July 1, 2017.
Now, it has been clarified that higher rate to be effective from October 6, 2021. “Past cases of payment of GST on supply of ice-cream by ice-cream parlours at 5 per cent without ITC shall be treated as fully GST paid, to avoid unnecessary litigation. Since the decision is only to regularise the past practice, no refund of GST shall be allowed, even if already paid at 18 per cent,” a circular issued on Wednesday said.
The same circular clarified the amount or fee charged from prospective students for entrance or admission, or for issuance of eligibility certificate to them in the process of their entrance/admission as well as the fee charged for issuance of migration certificates by educational institutions to the leaving or ex-students is covered by exemption under GST notification.
Preferred location charge, developed land
As per recommendation of the GST Council, the circular clarified that location charges or preferential location charges (PLC) paid upfront in addition to the lease premium for long term lease of land constitute part of upfront amount charged for long term lease of land and are eligible for the same tax treatment. “This is eligible for exemption,” the circular said.
Talking about developed land, it said that land may be sold either as it is or after some development such as levelling, laying down of drainage lines, water lines, electricity lines, etc. “It is clarified that sale of such developed land is also sale of land accordingly does not attract GST,” it said However, it may be noted that any service provided for development of land, like levelling, laying of drainage lines (as may be received by developers) shall attract GST at applicable rate for such services.
On the issue of applicability of GST on services in form of Assisted Reproductive Technology (ART)/ In vitro fertilization (IVF), the circular said that the abnormality/disease/ailment of infertility is treated using ART procedure such as IVF. “It is clarified that services by way of IVF are also covered under the definition of health care services for the purpose of exemption notification,” it said.