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Central Board of Indirect Taxes and Customs (CBIC)’s clarificatory circulars have retrospective effect

May 16, 2024
Emerging Market

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Rerefer to the CBIC Circular No. 204/16/2023-GST dated October 27, 2023 on the issues pertaining to taxability of personal guarantee and corporate guarantee and whether it is applicable for such guarantees given before the date of the circular.

The circulars only clarify or convey the understanding of the CBIC about the existing legal position. So, they have retrospective effect in the sense that the GST department will give effect to such circulars retrospectively. Of course, one is bound by the law only and not by the departmental circulars. See Para C.13 of Part C of the RBI Master Direction no.16/2015-16 dated January 1, 2016 (as amended) on Export of Goods and Services.

The Para C13 (i) says that AD Category – I, banks may consider the applications received from exporters and grant permission for opening/hiring warehouses abroad subject to the condition that applicant’s export outstanding does not exceed 5 percent of exports made during the previous financial year. The export receivables outstanding are always higher than 5 per cent of previous year exports because of extension of 3 months credit and in any case, even RBI gives 9 months’ time for realization of export proceeds.

As matters stand, the period of limitation of 3 months for filing of appeal under Section 112 of the CGST Act, 2017 read with CGST (9th Removal of Difficulties) Order, 2019, dated 3 December 2019 has now commenced on May 6, 2024 and so, the appeals to the GSTAT should be filed before August 5, 2024. However, the Judicial Members and Technical Members to the GSTAT have not yet been appointed and also there are some pending issues relating to modalities and infrastructure for filing of appeals to GSTAT. So, the Government may come up with another order for removal of difficulties further extending the time period for filing the appeals.


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