The Government of India, through Circular No. 236/30/2024-GST, dated October 11, 2024, has clarified the meaning and scope of the term “as is” or “as is, where is basis”, as used in past GST regularization measures. These clarifications aim to address genuine doubts regarding applicable GST rates, classification issues, and the treatment of past payments. Let’s dive into the key details of this circular and its implications for taxpayers.
1. Background of the Circular
The GST Council, in its 54th meeting on September 9, 2024, recommended issuing clarifications on the use of “as is, where is basis” in GST regularization cases. This term is often employed when reconciling issues arising from:
- Competing GST rate entries for a single good or service.
- Genuine doubts about exemptions or taxability.
- Divergent interpretations by taxpayers, leading to variations in tax rates applied.
2. What Does “As Is, Where Is Basis” Mean in GST?
In the context of GST, the term signifies that:
- Past payments made at lower rates or nil rates (due to genuine doubt or exemption claims) are considered as full discharge of tax liability.
- No additional demand for differential tax will be raised on those who paid lower rates.
- Taxpayers who paid higher rates are not entitled to refunds of the excess tax paid.
This ensures consistency in treating taxpayers equitably while regularizing past disputes.
3. Illustrations of Regularization on “As Is, Where Is Basis”
Example 1: Divergent GST Rates
- Scenario: Some taxpayers paid 5% GST, while others paid 12% GST on a supply. The GST Council later reduces the rate to 5% prospectively and regularizes the past on “as is, where is basis.”
- Outcome:
- Taxpayers who paid 5% GST will not be required to pay the 7% differential.
- Those who paid 12% will not receive refunds.
Example 2: Exemption Doubts
- Scenario: Some taxpayers paid 5% GST, while others treated the supply as exempt due to interpretational issues. The GST Council clarifies the rate as 5% and regularizes the past.
- Outcome:
- Taxpayers who declared the supply as exempt (and paid no GST) are deemed to have fully discharged their liability.
- Taxpayers who paid 5% GST will not receive refunds.
Example 3: Non-Payment of GST
- Scenario: Some taxpayers paid 5% GST, others paid 12% GST, and a few paid no GST. The GST Council clarifies the rate as 12% and regularizes the past.
- Outcome:
- Taxpayers who paid 5% GST will not need to pay the 7% differential.
- No refunds for taxpayers who paid 12%.
- Taxpayers who paid no GST must pay the applicable 12%.
4. Key Implications for Taxpayers
1. Relief for Lower-Rate Payers
Taxpayers who paid GST at the lower of two competing rates or claimed exemptions due to genuine doubt will not face additional demands for differential tax.
2. No Refunds for Overpayment
Taxpayers who paid GST at higher rates or opted not to claim exemptions will not receive refunds for the excess tax paid.
3. Strict Measures for Non-Compliance
The regularization applies only to cases where some GST has been paid. Non-compliance (i.e., no GST payment at all) will not qualify for this relief.
5. Administrative Directives
Field officers are instructed to:
- Treat past payments made at lower or nil rates as fully compliant with tax liabilities for the regularized period.
- Avoid issuing refunds for overpaid taxes in regularization cases.
- Recover applicable taxes from taxpayers who did not pay any GST.
6. Conclusion
The “as is, where is basis” approach balances fairness and compliance by ensuring that genuine interpretational errors or doubts are not penalized. Taxpayers are encouraged to review past GST filings and align with the regularization provisions outlined in this circular.
For further clarifications or assistance, taxpayers should contact their jurisdictional tax authorities or consult GST experts.
